Qualified ABLE program
For purposes of this section—
(1) In general
(1)In general#
The term “qualified ABLE program” means a program established and maintained by a State, or agency or instrumentality thereof—
(A) under which a person may make contributions for a taxable year, for the benefit of an individual who is an eligible individual for such taxable year, to an ABLE account which is established for the purpose of meeting the qualified disability expenses of the designated beneficiary of the account,
(B) which limits a designated beneficiary to 1 ABLE account for purposes of this section, and
(C) which meets the other requirements of this section.
(1)(A)#
under which a person may make contributions for a taxable year, for the benefit of an individual who is an eligible individual for such taxable year, to an ABLE account which is established for the purpose of meeting the qualified disability expenses of the designated beneficiary of the account,
(1)(B)#
which limits a designated beneficiary to 1 ABLE account for purposes of this section, and
(1)(C)#
(2)Cash contributions#
A program shall not be treated as a qualified ABLE program unless it provides that no contribution will be accepted—
(A) unless it is in cash, or
(B) except in the case of contributions under subsection (c)(1)(C) or received in a qualified ABLE rollover contribution described in section 530A(d)(4)(B), if such contribution to an ABLE account would result in aggregate contributions from all contributors to the ABLE account for the taxable year exceeding the sum of— (i) the amount in effect under section 2503(b) (determined by substituting “1996” for “1997” in paragraph (2)(B) thereof) for the calendar year in which the taxable year begins, plus (ii) in the case of any contribution by a designated beneficiary described in paragraph (7), the lesser of— (I) compensation (as defined by section 219(f)(1)) includible in the designated beneficiary’s gross income for the taxable year, or (II) an amount equal to the poverty line for a one-person household, as determined for the calendar year preceding the calendar year in which the taxable year begins.
For purposes of this paragraph, rules similar to the rules of section 408(d)(4) (determined without regard to subparagraph (B) thereof) shall apply. A designated beneficiary (or a person acting on behalf of such beneficiary) shall maintain adequate records for purposes of ensuring, and shall be responsible for ensuring, that the requirements of subparagraph (B)(ii) are met.
(2)(A)#
unless it is in cash, or
(2)(B)#
(3)Separate accounting#
A program shall not be treated as a qualified ABLE program unless it provides separate accounting for each designated beneficiary.
(4)Limited investment direction#
A program shall not be treated as a qualified ABLE program unless it provides that any designated beneficiary under such program may, directly or indirectly, direct the investment of any contributions to the program (or any earnings thereon) no more than 2 times in any calendar year.
(5)No pledging of interest as security#
A program shall not be treated as a qualified ABLE program if it allows any interest in the program or any portion thereof to be used as security for a loan.
(6)Prohibition on excess contributions#
A program shall not be treated as a qualified ABLE program unless it provides adequate safeguards to prevent aggregate contributions on behalf of a designated beneficiary in excess of the limit established by the State under section 529(b)(6). For purposes of the preceding sentence, aggregate contributions include contributions under any prior qualified ABLE program of any State or agency or instrumentality thereof but do not include any contributions received in a qualified ABLE rollover contribution described in section 530A(d)(4)(B).
(7)Special rules related to contribution limit#
For purposes of paragraph (2)(B)(ii)—
(A) Designated beneficiary A designated beneficiary described in this paragraph is an employee (including an employee within the meaning of section 401(c)) with respect to whom— (i) no contribution is made for the taxable year to a defined contribution plan (within the meaning of section 414(i)) with respect to which the requirements of section 401(a) or 403(a) are met, (ii) no contribution is made for the taxable year to an annuity contract described in section 403(b), and (iii) no contribution is made for the taxable year to an eligible deferred compensation plan described in section 457(b).
(B) Poverty line The term “poverty line” has the meaning given such term by section 673 of the Community Services Block Grant Act ( 42 U.S.C. 9902 ).
(7)(A)Designated beneficiary#
A designated beneficiary described in this paragraph is an employee (including an employee within the meaning of section 401(c)) with respect to whom—
(i) no contribution is made for the taxable year to a defined contribution plan (within the meaning of section 414(i)) with respect to which the requirements of section 401(a) or 403(a) are met,
(ii) no contribution is made for the taxable year to an annuity contract described in section 403(b), and
(iii) no contribution is made for the taxable year to an eligible deferred compensation plan described in section 457(b).