ABLE Programs and 529 Plans

By Mark A. Tronconi, CPA, MBA, Tax Partner

ABLE Programs 

An ABLE account is a tax advantaged investment account whereby a disabled beneficiary can invest money to grow tax-free to be further used to pay for expenses related to their disability. Under the old law there were restrictions as to how much money could be put into an ABLE account. Under the Tax Act, some of the contribution limits have been increased. In addition, certain amounts deposited into an ABLE account will qualify for the “Saver’s Credit;” and in certain circumstances, amounts previously invested in a Section 529 plan can be rolled over tax-free to an ABLE account.

  • If you or someone you know suffers from a disability and is currently in a position to set aside money for their current or future care, please consult with us so that we can work with you to maximize the tax benefits related to ABLE accounts. 

Section 529 Plan Account Funds

Non-deductible cash contributions can be made into a qualified tuition program, also known as a Section 529 plan, in which they grow tax free until used for higher education expenses, essentially for college tuition and certain related expenses. Under the Tax Act, the definition of “higher education” has been expanded to include elementary and secondary school tuition. So, a taxpayer can now distribute up to $10,000 per student towards the cost of elementary or secondary education.

  • While the liberalization of the rules is advantageous for covering tuition expenses, only certain expenses qualify; and in the case of multiple plans, care needs to be taken to insure excess distributions aren’t taken, thereby causing tax consequences. If you or a member of your family are paying tuition for elementary, secondary or post-secondary education, please reach out to us so that we can help you maximize your benefit under the new tax law.

 


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