529-ABLE plan

The “Achieving a Better Life Experience” (ABLE) Act was passed into law on December 19, 2014, as part of H.R.5771. The law created Section 529A of the Internal Revenue Code (26 U.S. Code §529A), and established the , a tax-preferred savings plan for the disabled. A 529A plan is similar to a 529 plan in that earnings on the contributions are tax deferred and tax-free when withdrawn to pay for qualified expenses for an eligible individual. A 529A plan (qualified ABLE program) must be sponsored by a state.

There can be only one 529A plan for a beneficiary (eligible individual), and total contributions in a year are limited to the annual exclusion amount under the gift tax laws. States must apply the same limit on aggregate accumulations to their 529A plan that they apply to their 529 plans. A plan can be established for a beneficiary only as part of the qualified ABLE program of the state (or contracted state) in which the beneficiary is resident.

Eligible individual and designated beneficiary
An eligible individual is someone who became blind or disabled before the age of 26 and is entitled to benefits because of blindness or disability either from Social Security or a state plan authorized under Title II or Title XVI of the Social Security Act. Someone can also be certified eligible if a claim is made based on a physician's diagnosis that the impairment began before the age of 26 and will result in death or has lasted or will last at least 12 months.

The designated beneficiary of a plan is the eligible individual who established the plan and is the owner of the plan.

Qualified expense
Qualified disability expenses are defined as any expenses related to the eligible individual’s blindness or disability which are made for the benefit of an eligible individual who is the designated beneficiary.

Qualifying expenses include the following:
 * Education;
 * Housing;
 * Transportation;
 * Employment training and support;
 * Assistive technology and personal support services:
 * Health, prevention and wellness;
 * Financial management and administrative services:
 * Legal fees, expenses for oversight and monitoring;
 * Funeral and burial expenses;
 * Other approved expenses.

Effects on Social Security and Medicaid

 * Section 103

Bankruptcy

 * Section 104

Investment direction for 529 plans

 * Section 105

Becomes effective for tax years after December 31, 2014.