Reg-102837-15

Part IV. Items of General Interest
Notice of Proposed
Rulemaking
Guidance under Section
529A: Qualified ABLE
Programs
REG–102837–15
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains
proposed regulations under section 529A
of the Internal Revenue Code that provide
guidance regarding programs under The
Stephen Beck, Jr., Achieving a Better Life
Experience Act of 2014. Section 529A
provides rules under which States or State
agencies or instrumentalities may establish and maintain a new type of taxfavored savings program through which
contributions may be made to the account
of an eligible disabled individual to meet
qualified disability expenses. These accounts also receive favorable treatment
for purposes of certain means-tested Federal programs. In addition, these proposed
regulations provide corresponding amendments to regulations under sections 511
and 513, with respect to unrelated business taxable income, sections 2501, 2503,
2511, 2642 and 2652, with respect to gift
and generation-skipping transfer taxes,
and section 6011, with respect to reporting
requirements. This document also provides notice of a public hearing on these
proposed regulations.
DATES: Comments must be received by
September 21, 2015. Outlines of topics to
be discussed at the public hearing scheduled for October 14, 2015, at 10 am, must
be received by September 21, 2015.
ADDRESSES: Send submissions to: CC:
PA:LPD:PR (REG–102837–15), room
5203, Internal Revenue Service, PO Box
7604, Ben Franklin Station, Washington
DC 20044. Submissions may be hand delivered Monday through Friday between
the hours of 8 a.m. and 4 p.m. to CC:PA:
LPD:PR (REG–102837–15), Courier’s

Bulletin No. 2015–27

Desk, Internal Revenue Service, 1111
Constitution Avenue NW, Washington,
DC, or sent electronically via the Federal
eRulemaking Portal at http://www.regulations.gov (IRS REG–102837–15). The
public hearing will be held in the Auditorium, Internal Revenue Building, 1111
Constitution Avenue, NW, Washington,
DC.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations under section 529A, Taina Edlund or Terri Harris, (202) 317-4541, or
Sean Barnett, (202) 317-5800; concerning
the proposed estate and gift tax regulations, Theresa Melchiorre, (202) 3174643; concerning the reporting provisions
under section 529A, Mark Bond, (202)
317-6844; concerning submissions of
comments, the hearing, and/or to be
placed on the building access list to attend
the hearing, call Regina Johnson, (202)
317-6901 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of
Management and Budget for review and
approval in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)). Comments on the collection of
information should be sent to the Office of
Management and Budget, Attn: Desk
Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with
copies to the Internal Revenue Service,
Attn: IRS Reports Clearance Officer, SE:
W:CAR:MP:T:T:SP, Washington, DC
20224. Comments on the collection of
information should be received by August
21, 2015.
Comments are specifically requested
concerning:
Whether the proposed collection of information is necessary for the proper performance of the functions of the Internal
Revenue Service, including whether the
information will have practical utility;

43

The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with the
proposed collection of information may
be minimized, including through forms of
information technology; and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of services to provide information.
The collection of information in the
proposed regulations is in §§ 1.529A–2,
1.529A–5, 1.529A– 6 and 1.529A–7. The
collection of information flows from sections 529A(d)(1), (d)(2), (d)(3), (e)(1) and
(e)(2) of the Internal Revenue Code
(Code). Section 529A(d)(1) requires qualified ABLE programs to provide reports to
the Secretary and to designated beneficiaries with respect to contributions, distributions, the return of excess contributions,
and such other matters as the Secretary
may require. Section 529A(d)(2) provides
that the Secretary shall make available to
the public reports containing aggregate information, by diagnosis and other relevant
characteristics, on contributions and distributions from the qualified ABLE program. Section 529A(d)(3) requires qualified ABLE programs to provide notice to
the Secretary upon the establishment of an
ABLE account, containing the name and
State of residence of the designated beneficiary and such other information as the
Secretary
may
require.
Section
529A(e)(1) requires that a disability certification with respect to certain individuals
be filed with the Secretary. Section
529A(e)(2) provides that the disability
certification include a certification to the
satisfaction of the Secretary that the individual has a medically determinable physical or mental impairment that occurred
before the date on which the individual
attained age 26 and also include a copy of
a physician’s diagnosis. The burden under
§§ 1.529A–5 and 1.529A– 6 is reflected in
the burden under the new Form 5498 –
QA, “ABLE Account Contribution Information,” and the new Form 1099 –QA,

July 6, 2015

“Distributions from ABLE Accounts,” respectively.
The expected recordkeepers are programs described in section 529A, established and maintained by a State or a State
agency or instrumentality and individuals
with ABLE accounts.
Estimated number of recordkeepers:
10,050.
Estimated average annual burden hours
per recordkeeper: 1.6 hours.
Estimated total annual recordkeeping
burden: 16,080.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number
assigned by the Office of Management
and Budget.
Books or records relating to a collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and
return information are confidential, as required by 26 U.S.C. 6103.
Background
The Stephen Beck, Jr., Achieving a
Better Life Experience (ABLE) Act of
2014, enacted on December 19, 2014, as
part of The Tax Increase Prevention Act
of 2014 (Public Law 113–295), added section 529A to the Internal Revenue Code.
Congress recognized the special financial
burdens borne by families raising children
with disabilities and the fact that increased
financial needs generally continue
throughout the disabled person’s lifetime.
Section 101 of the ABLE Act confirms
that one of the purposes of the Act is to
“provide secure funding for disabilityrelated expenses on behalf of designated
beneficiaries with disabilities that will
supplement, but not supplant, benefits”
otherwise available to those individuals,
whether through private sources, employment, public programs, or otherwise. Prior
to the enactment of the ABLE Act, various types of tax-advantaged savings arrangements existed, but none adequately
served the goal of promoting saving for
these financial needs. Section 529A allows the creation of a qualified ABLE
program by a State (or agency or instrumentality thereof) under which a separate
ABLE account may be established for a

July 6, 2015

disabled individual who is the designated
beneficiary and owner of that account.
Generally, contributions to that account
are subject to both an annual and a cumulative limit, and, when made by a person
other than the designated beneficiary, are
treated as non-taxable gifts to the designated beneficiary. Distributions made
from an ABLE account for qualified disability expenses of the designated beneficiary are not included in the designated
beneficiary’s gross income. The earnings
portion of distributions from the ABLE
account in excess of the qualified disability expenses is includible in the gross income of the designated beneficiary. An
ABLE account may be used for the longterm benefit and/or short-term needs of
the designated beneficiary.
Section 103 of the ABLE Act, while
not a tax provision, is critical to achieving
the goal of the ABLE Act of providing
financial resources for the benefit of disabled individuals. Because so many of the
programs that provide essential financial,
occupational, and other resources and services to disabled individuals are available
only to persons whose resources and income do not exceed relatively low dollar
limits, section 103 generally provides that
a designated beneficiary’s ABLE account
(specifically, its account balance, contributions to the account, and distributions
from the account) is disregarded for purposes of determining the designated beneficiary’s eligibility for and the amount of
any assistance or benefit provided under
certain means-tested Federal programs.
However, in the case of the Supplemental
Security Income program under title XVI
of the Social Security Act, distributions
for certain housing expenses are not disregarded, and the balance (including earnings) in an ABLE account is considered a
resource of the designated beneficiary to
the extent that balance exceeds $100,000.
Section 103 also addresses the impact of
an excess balance in an ABLE account on
the designated beneficiary’s eligibility under the Supplemental Security Income
program and Medicaid.
Finally, section 104 of the ABLE Act
addresses the treatment of ABLE accounts
in bankruptcy proceedings.
Notice 2015–18, 2015–12 IRB 765
(March 23, 2015), provides that the section 529A guidance will confirm that the

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owner of the ABLE account is the designated beneficiary of the account, and that
the person with signature authority over
(if not the designated beneficiary of) the
account may neither have nor acquire any
beneficial interest in the ABLE account
and must administer that account for the
benefit of the designated beneficiary of
that account. The Notice further provides
that, in the event that state legislation creating ABLE programs enacted in accordance with section 529A prior to issuance
of guidance does not fully comport with
the guidance when issued, the Treasury
Department and the IRS intend to provide
transition relief to provide sufficient time
to allow States to implement the changes
necessary to avoid the disqualification of
the program and of the ABLE accounts
already established under the program.
The Treasury Department and the IRS
reiterate that States that enact legislation
creating an ABLE program in accordance
with section 529A, and those individuals
establishing ABLE accounts in accordance with such legislation, will not fail to
receive the benefits of section 529A
merely because the legislation or the account documents do not fully comport
with the final regulations when they are
issued. The Treasury Department and the
IRS intend to provide transition relief to
enable those State programs and accounts
to be brought into compliance with the
requirements in the final regulations, including providing sufficient time after issuance of the final regulations in order for
changes to be implemented.
Explanation of Provisions
Qualification as an ABLE program
The proposed regulations provide
guidance on the requirements a program
must satisfy in order to be a qualified
ABLE program described in section
529A. Specifically, in addition to other
requirements, the program must: be established and maintained by a State or a
State’s agency or instrumentality; permit
the establishment of an ABLE account
only for a designated beneficiary who is a
resident of that State, or a State contracting with that State for purposes of the
ABLE program; permit the establishment
of an ABLE account only for a designated
beneficiary who is an eligible individual;

Bulletin No. 2015–27

limit a designated beneficiary to only one
ABLE account, wherever located; permit
contributions to an ABLE account established to meet the qualified disability expenses of the account’s designated beneficiary; limit the nature and amount of
contributions that can be made to an
ABLE account; require a separate accounting for the ABLE account of each
designated beneficiary with an ABLE account in the program; limit the designated
beneficiary to no more than two opportunities in any calendar year to provide investment direction, whether directly or indirectly, for the ABLE account; and
prohibit the pledging of an interest in an
ABLE account as security for a loan.
Because each qualified ABLE program
will have significant administrative obligations beyond what is required for the
administration of qualified tuition programs under section 529 (on which section 529A was loosely modeled), and because the frequency of distributions from
the ABLE accounts is likely to be far
greater than those made from qualified
tuition accounts, the proposed regulations
expressly allow a qualified ABLE program or any of its contractors to contract
with one or more Community Development Financial Institutions (CDFIs) that
commonly serve disabled individuals and
their families to provide one or more required services. For example, a CDFI
could provide screening and verification
of disabilities, certification of the qualified
purpose of distributions, debit card services to facilitate distributions, and social
data collection and reporting. A CDFI also
may be able to obtain grants to defray the
cost of administering the program. In general, if certified by the Treasury Department, a CDFI may receive a financial assistance award from the CDFI Fund that
was established within the Treasury Department in 1994 to promote community
development in economically distressed
communities through investments in CDFIs across the country.
Established and maintained
The proposed regulations provide that
a program is established by a State, or its
agency or instrumentality, if the program
is initiated by State statute or regulation,
or by an act of a State official or agency

Bulletin No. 2015–27

with the authority to act on behalf of the
State. A program is maintained by a State
or its agency or instrumentality if: all the
terms and conditions of the program are
set by the State or its agency or instrumentality, and the State or its agency or
instrumentality is actively involved on an
ongoing basis in the administration of the
program, including supervising all decisions relating to the investment of assets
contributed to the program. The proposed
regulations set forth factors that are relevant in determining whether a State, or its
agency or instrumentality, is actively involved in the administration of the program. Included in the factors is the manner and extent to which it is permissible
for the program to contract out for professional and financial services.
Establishment of an ABLE account
The proposed regulations provide that,
consistent with the definition of a designated beneficiary in section 529A(e)(3),
the designated beneficiary of an ABLE
account is the eligible individual who
establishes the account or an eligible
individual who succeeded the original
designated beneficiary. The proposed
regulations also provide that the designated beneficiary is the owner of that
account.
The Treasury Department and the IRS
recognize, however, that certain eligible
individuals may be unable to establish an
account themselves. Therefore, the proposed regulations clarify that, if the eligible individual cannot establish the account, the eligible individual’s agent
under a power of attorney or, if none, his
or her parent or legal guardian may establish the ABLE account for that eligible
individual. For purposes of these proposed
regulations, because each of these individuals would be acting on behalf of the
designated beneficiary, references to actions of the designated beneficiary, such
as opening or managing the ABLE account, are deemed to include the actions
of any other such individual with signature authority over the ABLE account.
The proposed regulations also provide
that, consistent with Notice 2015–18, a
person other than the designated beneficiary with signature authority over the account of the designated beneficiary may

45

neither have, nor acquire, any beneficial
interest in the account during the designated beneficiary’s lifetime and must administer the account for the benefit of the
designated beneficiary.
At the time an ABLE account is created for a designated beneficiary, the designated beneficiary must provide evidence
that the designated beneficiary is an eligible individual as defined in section
529A(e)(1). Section 529A(e)(1) provides
that an individual is an eligible individual
for a taxable year if, during that year,
either the individual is entitled to benefits
based on blindness or disability under title
II or XVI of the Social Security Act and
the blindness or disability occurred before
the date on which the individual attained
age 26, or a disability certification meeting specified requirements is filed with the
Secretary. If an individual is asserting he
or she is entitled to benefits based on
blindness or disability under title II or
XVI of the Social Security Act and the
blindness or disability occurred before the
date on which the individual attained age
26, the proposed regulations provide that
each qualified ABLE program may determine the evidence required to establish
the individual’s eligibility. For example, a
qualified ABLE program could require the
individual to provide a copy of a benefit
verification letter from the Social Security
Administration and allow the individual
to certify, under penalties of perjury,
that the blindness or disability occurred
before the date on which the individual
attained age 26.
Alternatively, the designated beneficiary must submit the disability certification when opening the ABLE account.
Consistent with section 529A(e)(2), the
proposed regulations provide that a disability certification is a certification by the
designated beneficiary that he or she: (1)
has a medically determinable physical or
mental impairment, which results in
marked or severe functional limitations,
and which (i) can be expected to result in
death or (ii) has lasted or can be expected
to last for a continuous period of not less
than 12 months; or (2) is blind (within the
meaning of section 1614(a)(2) of the Social Security Act) and that such blindness
or disability occurred before the date on
which the individual attained age 26. The
certification must include a copy of the

July 6, 2015

individual’s diagnosis relating to the individual’s relevant impairment or impairments, signed by a licensed physician (as
defined in section 1861(r) of the Social
Security Act, 42 U.S.C. 1395x(r)). Consistent with other IRS filing requirements,
the proposed regulations also provide that
the certification must be signed under penalties of perjury.
While evidence of an individual’s eligibility based on entitlement to Social Security benefits should be objectively verifiable, the sufficiency of a disability
certification that an individual is an eligible individual for purposes of section
529A might not be as easy to establish.
Nevertheless, the Treasury Department
and the IRS wish to facilitate an eligible
individual’s ability to establish an ABLE
account without undue delay. Therefore,
the proposed regulations provide that an
eligible individual must present the disability certification, accompanied by the
diagnosis, to the qualified ABLE program
to demonstrate eligibility to establish an
ABLE account. The proposed regulations
further provide that the disability certification will be deemed to be filed with the
Secretary once the qualified ABLE program has received the disability certification or a disability certification has been
deemed to have been received under the
rules of the qualified ABLE program,
which information the qualified ABLE
program, as discussed further below, will
file with the IRS in accordance with the
filing requirements under § 1.529A–
5(c)(2)(iv).
Disability determination
Consistent with section 529A(g)(4),
the Treasury Department and the IRS
have consulted with the Commissioner of
Social Security regarding disability certifications and determinations of disability.
For purposes of the disability certification,
the proposed regulations provide that the
phrase “marked and severe functional limitations” means the standard of disability
in the Social Security Act for children
claiming benefits under the Supplemental
Security Income for the Aged, Blind, and
Disabled (SSI) program based on disability, but without regard to the age of the
individual. This phrase refers to a level of
severity of an impairment that meets,

July 6, 2015

medically equals, or functionally equals
the listings in the Listing of Impairments
(the listings) in appendix 1 of subpart P of
20 CFR part 404. (See 20 CFR 416.906,
416.924 and 416.926a). This listing developed and used by the Social Security Administration describes for each of the major body systems impairments that cause
marked and severe functional limitations.
Most body system sections are in two
parts: an introduction, followed by the
specific listings. The introduction contains
information relevant to the use of the listings with respect to that body system,
such as examples of common impairments
in the body system and definitions used in
the listings for that body system. The introduction may also include specific criteria for establishing a diagnosis, confirming the existence of an impairment, or
establishing that an impairment satisfies
the criteria of a particular listing with respect to the body system. The specific
listings that follow the introduction for
each body system specify the objective
medical and other findings needed to satisfy the criteria of that listing. Most of the
listed impairments are permanent or expected to result in death, although some
listings state a specific period of time for
which an impairment will meet the listing.
An impairment is medically equivalent
to a listing if it is at least equal in severity
and duration to the severity and duration
of any listing. An impairment that does
not meet or medically equal any listing
may result in limitations that functionally
equal the listings if it results in marked
limitations in two domains of functioning
or an extreme limitation in one domain of
functioning, as explained in 20 CFR
416.926a. In addition, the proposed regulations provide that certain conditions,
specifically those listed in the Compassionate Allowances Conditions list maintained by the Social Security Administration, are deemed to meet the requirements
of an impairment sufficient for a disability
certification without a physician’s diagnosis, provided that the condition was present before the date on which the individual attained age 26. The proposed
regulations also provide the flexibility
from time to time to identify additional
impairments that will be deemed to meet
these requirements. The Treasury Department and the IRS request comments on

46

what other conditions should be deemed
to meet the requirements of section
529A(e)(2)(A)(i).
Change in eligible individual status
The Treasury Department and the IRS
recognize that there may be circumstances
in which a designated beneficiary ceases
to be an eligible individual but subsequently regains that status. Consequently,
the Treasury Department and the IRS believe that it is appropriate to permit continuation of the ABLE account (albeit
with some changes in the applicable rules)
during the period in which a designated
beneficiary is not an eligible individual as
long as the designated beneficiary was an
eligible individual when the account was
established. Therefore, if at any time a
designated beneficiary no longer meets
the definition of an eligible individual, his
or her ABLE account remains an ABLE
account to which all of the provisions of
the ABLE Act continue to apply, and no
(taxable) distribution of the account balance is deemed to occur. However, the
proposed regulations provide that, beginning on the first day of the taxable year
following the taxable year in which the
designated beneficiary ceased to be an eligible individual, no contributions to the
ABLE account may be accepted. If the
designated beneficiary subsequently again
becomes an eligible individual, then additional contributions may be accepted subject to the applicable annual and cumulative limits. In this way, the Treasury
Department and the IRS intend to prevent
a deemed distribution of the ABLE account (and preserve the account’s qualification as an ABLE account for all purposes) if, for example, the disease that
caused the impairment goes into a temporary remission, and to preserve the ABLE
account with its tax-free distributions for
qualified disability expenses if the impairment resumes and once again qualifies the
designated beneficiary as an eligible individual. Note that expenses will not be
qualified disability expenses if they are
incurred at a time when a designated beneficiary is neither disabled nor blind
within the meaning of § 1.529A–1(b)(9)(i)
or § 1.529A–2(e)(1)(i).
The proposed regulations provide flexibility regarding annual recertifications. A

Bulletin No. 2015–27

qualified ABLE program generally must
require annual recertifications that the
designated beneficiary continues to satisfy
the definition of an eligible individual.
However, a qualified ABLE program may
deem an annual recertification to have
been provided in appropriate circumstances. For example, a qualified ABLE
program may permit certification by an
individual that he or she has a permanent
disability to be considered to meet the
annual requirement to present a certification to the qualified ABLE program. In
other cases, a program may require all of
the same evidence needed for the initial
disability certification when the account
was established, may require a statement
under penalties of perjury that nothing has
changed that would change the original
disability certification, or may incorporate
some other method of ensuring that the
designated beneficiary continuously qualifies as an eligible individual. Alternatively, a qualified ABLE program may
identify certain impairments or categories
of impairments for which recertifications
will be deemed to have been made annually to the qualified ABLE program unless
and until the qualified ABLE program
provides otherwise (for example, if a cure
is discovered for a disease that causes an
impairment). An initial certification or recertification that meets the requirements
of the qualified ABLE program will be
deemed to have met the requirement of
section 529A(e)(1)(B). The Treasury Department and the IRS request comments
regarding how a qualified ABLE program
will be able to demonstrate eligibility in
subsequent years if it allows deemed recertifications.
Contributions to an ABLE account
The proposed regulations provide that,
as a general rule, all contributions to an
ABLE account must be made in cash. The
proposed regulations provide that a qualified ABLE program may accept cash
contributions in the form of cash or a
check, money order, credit card payment,
or other similar method of payment. In
addition, the proposed regulations provide
that the total contributions to an ABLE
account in the designated beneficiary’s
taxable year, other than amounts received
in rollovers and program-to-program

Bulletin No. 2015–27

transfers, must not exceed the amount of
the annual per-donee gift tax exclusion
under section 2503(b) in effect for that
calendar year (currently $14,000) in
which the designated beneficiary’s taxable
year begins. Finally, a qualified ABLE
program must provide adequate safeguards to ensure that total contributions to
an ABLE account (including the proceeds
from a preexisting ABLE account) do not
exceed that State’s limit for aggregate
contributions under its qualified tuition
program.
To implement these requirements, the
proposed regulations provide that a qualified ABLE program must return contributions in excess of the annual gift tax
exclusion (excess contributions) to the
contributor(s), along with all net income
attributable to those excess contributions.
Similarly, the proposed regulations also
require the return of all contributions,
along with all net income attributable to
those contributions, that caused an ABLE
account to exceed the limit established by
the State for its qualified tuition program
(excess aggregate contributions). If an excess contribution or excess aggregate contribution is returned to a contributor other
than the designated beneficiary, the qualified ABLE program must notify the designated beneficiary of such return at the
time of the return. The proposed regulations further provide that such returns of
excess contributions and excess aggregate
contributions must be received by the contributor(s) on or before the due date (including extensions) of the designated beneficiary’s income tax return for the year in
which the excess contributions were made
or in the year the excess aggregate contributions caused amounts in the ABLE account to exceed the limit in effect under
section 529A(b)(6), respectively. The proposed regulations provide rules for determining the net income attributable to a
contribution made to an ABLE account,
and also provide that these excess contributions and excess aggregate contributions must be returned to contributors on a
last-in, first-out basis. In the case of contributions that exceed the annual gift tax
exclusion, a failure to return such excess
contributions within the time period discussed in this paragraph will result in the
imposition on the designated beneficiary
of a 6 percent excise tax under section

47

4973(a)(6) on the amount of excess contributions. As part of a planned revision of
IRA regulations, the Treasury Department
and the IRS intend to propose regulations
under section 4973 to reflect that ABLE
accounts are subject to section 4973.
Application of gift tax to contributions to
an ABLE account
Gift tax consequences may arise from
contributions to an ABLE account even
though the aggregate amount of such contributions to an ABLE account from all
contributors may not exceed the annual
exclusion amount under section 2503(b)
applicable to any single contributor. Specifically, if a contributor makes other gifts
to a designated beneficiary in addition to
the gift to the designated beneficiary’s
ABLE account, the contributor’s total
gifts made to the designated beneficiary in
that year could give rise to a gift tax
liability.
Contributions may be made by any
person. The term person is defined in section 7701(a)(1) to include an individual,
trust, estate, partnership, association,
company, or corporation. Therefore, for
purposes of section 529A(b)(1)(A), a person would include an individual and each
of the entities described in section
7701(a)(1). Under section 2501(a)(1), the
gift tax applies only to gifts by individuals, but it also applies to gifts made directly or indirectly. As a result, a gift
made by a trust, estate, association, company, corporation, or partnership is treated
as having been made by the owner(s) of
that entity. For example, a gift from a
corporation to a designated beneficiary is
treated as a gift from the shareholders of
the corporation to the designated beneficiary. See Example (1) of § 25.2511–1(h).
Accordingly, the proposed regulations
provide that, for purposes of sections
529A(b)(1)(A) and 529A(c)(1)(C), a contribution by a corporation is treated as a
gift by its shareholders and a contribution
by a partnership is treated as a gift by its
partners. This rule also applies to trusts,
estates, associations, and companies. See
section 2511 and § 25.2511–1(c).
The legislative history of section 529A
suggests that a “person” described in section 529A(b)(1)(A) includes the designated beneficiary of an ABLE account.

July 6, 2015

See 160 Cong. Rec. H7051, H8317,
H8318, H8321, H8322 (2014). A person
may transfer his or her property into an
account, such as a bank account or a trust,
for his or her benefit and retain dominion
and control over the property transferred.
Because an individual cannot make a
transfer of property to himself or herself
and a transfer of property is a fundamental
requirement for a completed gift, this type
of transfer from a person’s own property
cannot be treated as a completed gift for
tax purposes. See § 25.2511–2(b) and (c).
Therefore, the proposed regulations provide that any contribution by a designated
beneficiary to a qualified ABLE program
benefitting the designated beneficiary is
not treated as a completed gift. Because
the designated beneficiary remains the
owner of the account for purposes of
chapter 12, if the designated beneficiary
transfers the funds in the account to another person as permitted under these proposed regulations, the designated beneficiary making the transfer is the donor for
purposes of chapter 12 and the transferor
for generation-skipping transfer tax purposes of chapter 13.
Distributions
If distributions from an ABLE account
do not exceed the designated beneficiary’s
qualified disability expenses, no amount is
includible in the designated beneficiary’s
gross income. Otherwise, the earnings
portion of the distributions from the
ABLE account as determined in the manner provided under section 72, reduced by
the product of such earnings portion and
the ratio of the amount of the distributions
for qualified disability expenses to total
distributions, is includible in the gross income of the designated beneficiary to the
extent not otherwise excluded from gross
income. As required by section
529A(c)(1)(D), the proposed regulations
provide that, for purposes of applying section 72 to amounts distributed from an
ABLE account: (1) all distributions during
a taxable year are treated as one distribution; and (2) the value of the contract,
income on the contract, and investment in
the contract are computed as of the close
of the calendar year in which the designated beneficiary’s taxable year begins.

July 6, 2015

The proposed regulations also provide
that, in addition to the income tax on the
portion of a distribution included in gross
income, an additional tax of 10 percent of
the amount includible in gross income is
imposed. This additional tax does not apply, however, to distributions on or after
the designated beneficiary’s death or to
returns of excess contributions, excess aggregate contributions, or contributions to
additional purported ABLE accounts
made by the due date (including extensions) of the designated beneficiary’s tax
return for the year in which the relevant
contributions were made.
Section 529A(c)(1)(C) addresses the
tax consequences of the rollover of an
ABLE account to an ABLE account for
the same designated beneficiary maintained under a different State’s qualified
ABLE program, as well as a change of
designated beneficiary. The proposed regulations describe with respect to these two
situations the circumstances in which
amounts will not be includible in income.
The first is any change of designated beneficiary if the new designated beneficiary
is both (1) an eligible individual for his or
her taxable year in which the change is
made and (2) a sibling of the former designated beneficiary. For purposes of these
proposed regulations, a sibling also includes step-siblings and half-siblings,
whether by blood or by adoption. The
proposed regulations provide that a qualified ABLE program must permit a
change of designated beneficiary, as long
as the change is made prior to the death of
the former designated beneficiary and as
long as the successor designated beneficiary is an eligible individual. Because the
designated beneficiary will be subject to
gift and/or generation-skipping transfer
tax if the successor designated beneficiary
is not a sibling of the designated beneficiary, the Treasury Department and the
IRS request comments regarding whether
the final regulations should permit States
to require that a successor designated beneficiary also must be a sibling of the designated beneficiary.
The second situation in which a distribution is not included in gross income
arises if a distribution to the designated
beneficiary of the ABLE account is paid,
not later than the 60th day after the date of
the distribution, to another (or the same)

48

ABLE account for the benefit of the designated beneficiary or for the benefit of an
eligible individual who is a sibling of the
designated beneficiary. However, the preceding sentence does not apply to such a
distribution that occurs within 12 months
of a previous rollover to another ABLE
account for the same designated beneficiary.
The Treasury Department and the IRS
have been asked whether a qualified tuition account under section 529 may be
rolled into an ABLE account for the same
designated beneficiary free of tax. Because such a distribution to the ABLE
account would not constitute a qualified
higher education expense under section
529, the Treasury Department and the IRS
do not believe they have the authority to
allow such a transfer on a tax-free basis.
In addition, the proposed regulations
authorize a qualified ABLE program to
allow program-to-program transfers to effectuate a change of qualified ABLE program or a change of designated beneficiary to another eligible individual. Such a
direct transfer is neither a distribution
taxed in accordance with section 72 nor an
excess contribution. A program-toprogram transfer also could be accomplished, if permitted by the qualified
ABLE program, through a check delivered to the designated beneficiary but negotiable only by the qualified State program under which the new ABLE account
is being established.
The Treasury Department and the IRS
recognize that moving funds by use of a
program-to-program transfer may be preferable to moving them by a rollover because a rollover, even if made within the
permissible 60-day period, may jeopardize the designated beneficiary’s eligibility for certain benefits under various
means-tested programs. Moreover, a direct program-to-program transfer could
facilitate the efficient transfer of all relevant information regarding the application
of contribution limits and the total amount
of accumulated earnings that will also apply to the new account. The Treasury Department and the IRS request comments
as to whether and to what extent a qualified ABLE program should be permitted
to require that funds from another State’s
ABLE program be accepted only through
program-to-program transfers.

Bulletin No. 2015–27

Qualified disability expenses
Section 529A(e)(5) defines a qualified
disability expense. Consistent with that
subsection, the proposed regulations provide that qualified disability expenses are
expenses that relate to the designated beneficiary’s blindness or disability and are
for the benefit of that designated beneficiary in maintaining or improving his or
her health, independence, or quality of
life. Such expenses include, but are not
limited to, expenses for 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, and other expenses that may be identified from time to
time in future guidance published in the
Internal Revenue Bulletin. As previously
stated, expenses incurred at a time when a
designated beneficiary is neither disabled
nor blind within the meaning of the proposed regulations are not qualified disability expenses.
In order to implement the legislative
purpose of assisting eligible individuals in
maintaining or improving their health, independence, or quality of life, the Treasury Department and the IRS conclude
that the term “qualified disability expenses” should be broadly construed to
permit the inclusion of basic living expenses and should not be limited to expenses for items for which there is a medical necessity or which provide no benefits
to others in addition to the benefit to the
eligible individual. For example, expenses
for common items such as smart phones
could be considered qualified disability
expenses if they are an effective and safe
communication or navigation aid for a
child with autism. The Treasury Department and the IRS request comments regarding what types of expenses should be
considered qualified disability expenses
and under what circumstances. The proposed regulations authorize the identification of additional types of qualified disability expenses in guidance published in
the Internal Revenue Bulletin. See
§ 601.601(d)(2). A qualified ABLE program must establish safeguards to distinguish between distributions used for the

Bulletin No. 2015–27

payment of qualified disability expenses
and other distributions, and to permit the
identification of the amounts distributed
for housing expenses as that term is defined for purposes of the Supplemental
Security Income program of the Social
Security Administration.
Limitation on number of ABLE accounts
of a designated beneficiary
Section 529A(c)(4) generally provides
that, except with respect to certain rollovers, once an ABLE account has been
established for a designated beneficiary,
no account subsequently established for
that same designated beneficiary may
qualify as an ABLE account. The proposed regulations provide that, except
with respect to rollovers and program-toprogram transfers, no designated beneficiary may have more than one ABLE account in existence at the same time, but
provides that a prior ABLE account that
has been closed does not prohibit the subsequent creation of another ABLE account for the same designated beneficiary.
A qualified ABLE program must obtain a
verification from the eligible individual,
signed under penalties of perjury, that he
or she has no other ABLE account (except
in the case of a rollover or program-toprogram transfer). The proposed regulations provide that, in the event that any
additional ABLE account is opened for a
designated beneficiary with an ABLE account already in existence, only the first
such account created for that designated
beneficiary qualifies as an ABLE account,
and each other account is treated for all
purposes as being an account of the designated beneficiary that is not an ABLE
account under a qualified ABLE program.
The proposed regulations also provide,
however, that a return, in accordance with
the rules that apply to returns of excess
contributions and excess aggregate contributions under § 1.529A–2(g)(4), of the
entire balance of a second or other subsequent account received by the contributor(s) on or before the due date (including
extensions) for filing the designated beneficiary’s income tax return for the year in
which the account was opened and contributions to the second or subsequent account were made will not be treated as a

49

gift or distribution to the designated beneficiary for purposes of section 529A.
The prohibition of multiple ABLE accounts, however, does not apply to prevent a timely rollover or program-toprogram transfer of the designated
beneficiary’s account to an ABLE account
under a different qualified ABLE program.
Residency requirements
Consistent with section 529A(b)(1)(C),
the proposed regulations require that an
ABLE account for a designated beneficiary may be established only under the
qualified ABLE program of the State in
which that designated beneficiary is a resident or with which the State of the designated beneficiary’s residence has contracted for the provision of ABLE
accounts. If a State does not establish and
maintain a qualified ABLE program, it
may contract with another State to provide
an ABLE program for its residents. The
statute is silent as to whether a designated
beneficiary must move his or her existing
ABLE account when the designated beneficiary changes his or her residence. The
Treasury Department and the IRS are concerned about imposing undue administrative burdens and costs on designated beneficiaries who frequently change State
residency, such as members of military
families. Therefore, the proposed regulations provide that a qualified ABLE program may permit a designated beneficiary
to continue to maintain his or her ABLE
account that was created in that State,
even after the designated beneficiary is no
longer a resident of that State. However,
in order to enforce the one ABLE account
limitation and in accordance with section
529A(g)(1), the proposed regulations provide that, other than in the case of a rollover or a program-to-program transfer of
a designated beneficiary’s ABLE account,
a qualified ABLE program must require
the designated beneficiary to verify, under
penalties of perjury, when creating an
ABLE account that the account being established is the designated beneficiary’s
only ABLE account. For example, the eligible individual could be required to
check a box providing such verification on
a form used to establish the account. The
Treasury Department and the IRS are con-

July 6, 2015

cerned that without such safeguards individuals could inadvertently establish two
accounts with adverse tax consequences
due to the loss of ABLE account status for
the second account and expect qualified
ABLE programs to establish safeguards to
ensure that the required limit of one
ABLE account per designated beneficiary
is not violated.
Investment direction
Section 529A(b)(4) states that a program shall not be treated as a qualified
ABLE program unless it provides that the
designated beneficiary may directly or indirectly direct the investment of any contributions to the program or any earnings
thereon no more than two times in any
calendar year. A program will not violate
this requirement merely because it permits
a designated beneficiary or a person with
signature authority over a designated beneficiary’s account to serve as one of the
program’s board members or employees,
or as a board member or employee of a
contractor that the program hires to perform administrative services.
Cap on contributions
Section 529A(b)(6) provides that a
qualified ABLE program must provide 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)
relating to Qualified State Tuition Programs. The proposed regulations provide
a safe harbor that permits a qualified
ABLE program to satisfy this requirement
regarding total cumulative contributions if
the program prohibits any additional contributions to an account as soon as the
account balance reaches the specified contribution limit under such State’s program
established under section 529. Once the
account balance falls below the prescribed
limit, contributions may resume, subject
to the same limitation. The Treasury Department and the IRS believe that recommencement of contributions is appropriate
based on the nature and purposes of the
ABLE program.

July 6, 2015

Gift and generation-skipping transfer
(GST) taxes
The proposed regulations provide that
contributions to an ABLE account by a
person other than the designated beneficiary are treated as completed gifts to the
designated beneficiary of the account, and
that such gifts are neither gifts of a future
interest nor a qualified transfer under section 2503(e). Accordingly, no distribution
from an ABLE account to the designated
beneficiary of that account is treated as a
taxable gift. Finally, neither gift nor GST
taxes apply to the change of designated
beneficiary of an ABLE account, as long
as the new designated beneficiary is an
eligible individual who is a sibling of the
former designated beneficiary.
Distribution on death
The proposed regulations provide that,
upon the death of the designated beneficiary, all amounts remaining in the ABLE
account are includible in the designated
beneficiary’s gross estate for purposes of
the estate tax. See section 2031. Further,
the proposed regulations cross-reference
section 2053 for purposes of determining
the deductibility by the designated beneficiary’s estate of amounts payable from
the ABLE account to satisfy claims by
creditors such as a State and also crossreference section 2652(a)(1) for treatment
of the deceased designated beneficiary as
the transferor of any property remaining
in the ABLE account that may pass to a
beneficiary.
Pursuant to section 529A(f), a qualified
ABLE program must provide that, upon
the designated beneficiary’s death, any
State may file a claim (either with the
person with signature authority over the
ABLE account or the executor of the designated beneficiary’s estate as defined in
section 2203) for the amount of the total
medical assistance paid for the designated
beneficiary under the State’s Medicaid
plan after the establishment of the ABLE
account. The amount paid in satisfaction
of such a claim is not a taxable distribution from the ABLE account. Further, the
amount is to be paid only after the payment of all outstanding payments due for
the qualified disability expenses of the
designated beneficiary and is to be re-

50

duced by the amount of all premiums paid
by or on behalf of the designated beneficiary to a Medicaid Buy-In program under
that State’s Medicaid plan.
Unrelated business taxable income and
filing requirements
A qualified ABLE program generally
is exempt from income taxation. A qualified ABLE program, however, is subject
to the taxes imposed by section 511 relating to the imposition of tax on unrelated
business taxable income (“UBTI”). For
purposes of this tax, certain administrative
and other fees do not constitute unrelated
business income to the ABLE program. A
qualified ABLE program is not required to
file Form 990, “Return of Organization
Exempt From Income Tax,” but will be
required to file Form 990-T, “Exempt Organization Business Income Tax Return,”
if a filing would be required under the
rules of §§1.6012–2(e) and 1.6012–
3(a)(5) if the ABLE program were an organization described in those sections.
Reporting requirements
The proposed regulations set forth recordkeeping and reporting requirements.
A qualified ABLE program must maintain
records that enable the program to account
to the Secretary with respect to all contributions, distributions, returns of excess
contributions or additional accounts, income earned, and account balances for
any designated beneficiary’s ABLE account. In addition, a qualified ABLE program must report to the Secretary the establishment of each ABLE account,
including the name and residence of the
designated beneficiary, and other relevant
information regarding the account that is
included on the new Form 5498-QA,
“ABLE Account Contribution Information.” It is anticipated that the qualified
ABLE program will report if the eligible
individual has presented an adequate disability certification, accompanied by a diagnosis, to demonstrate eligibility to establish an account. Information regarding
distributions will be reported on the new
Form 1099-QA, “Distributions from
ABLE Accounts.” The proposed regulations contain more detail on how the information must be reported.

Bulletin No. 2015–27

In addition, section 529A(b)(3) requires that a qualified ABLE program provide separate accounting for each designated beneficiary. Separate accounting
requires that contributions for the benefit
of a designated beneficiary, as well as
earnings attributable to those contributions, are allocated to that designated beneficiary’s account. Whether or not a program ordinarily provides each designated
beneficiary an annual account statement
showing the income and transactions related to the account, the program must
give this information to the designated
beneficiary upon request.
Section 529A(d)(4) provides that
States are required to submit electronically to the Commissioner of Social Security, on a monthly basis and in the manner specified by the Commissioner of
Social Security, statements on relevant
distributions and account balances from
all ABLE accounts. The report of the
Committee on Ways and Means (H.R.
Rep. No. 113– 614, pt. 1, at 15 (2014))
indicates that States should work with the
Commissioner of Social Security to identify data elements for the monthly reports,
including the type of qualified disability
expenses.
Effective Date/Applicability Date
These regulations are proposed to be
effective as of the date of publication of
the Treasury decision adopting these
rules as final regulations in the Federal
Register. These rules, when adopted as
final regulations, will apply to taxable
years beginning after December 31,
2014. The reporting requirements of
§§1.529A–5 through 1.529A–7 will apply to information returns required to be
filed, and payee statements required to
be furnished, after December 31, 2015.
Until the issuance of final regulations,
taxpayers and qualified ABLE programs
may rely on these proposed regulations.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by
Executive Order 13563. It has also been
determined that section 553(b) of the Administrative Procedure Act (5 U.S.C.

Bulletin No. 2015–27

chapter 5) does not apply to this regulation and, because the regulation does not
impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
This regulation, if adopted, would primarily affect states and individuals and therefore would not have a significant economic impact on a substantial number of
small entities. Therefore, a regulatory
flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment on its
impact on small businesses.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, consideration
will be given to any comments that are
timely submitted to the IRS as prescribed
in this preamble under the “Addresses”
heading. The Treasury Department and
the IRS request comments on all aspects
of the proposed rules. All comments will
be available at www.regulations.gov or
upon request. A public hearing will be
scheduled if requested in writing by any
person that timely submits written or electronic comments. If a public hearing is
scheduled, notice of the date, time, and
place for the hearing will be published in
the Federal Register.
A public hearing has been scheduled
for October 14, 2015, beginning at 10:00
am in the Auditorium, Internal Revenue
Building, 1111 Constitution Avenue, NW,
Washington, DC. Due to building security
procedures, visitors must enter at the Constitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
For information about having your name
placed on the building access list to attend
the hearing, see the “FOR FURTHER INFORMATION CONTACT” section of
this preamble.
The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to
present oral comments at the hearing must
submit written comments by September
21, 2015, and an outline of the topics to be

51

discussed and the time to be devoted to
each topic (signed original and eight (8)
copies) by September 21, 2015. Submit a
signed paper original and eight (8) copies
or an electronic copy. A period of 10
minutes will be allotted to each person for
making comments. An agenda showing
the scheduling of the speakers will be
prepared after the deadline for receiving
outlines has passed. Copies of the agenda
will be available free of charge at the
hearing.
Drafting Information
The principal authors of these regulations are Terri Harris and Sean Barnett, Office of Associate Chief Counsel
(Tax Exempt and Government Entities).
However, other personnel from the
Treasury Department and the IRS participated in the development of these
regulations.
*****
Proposed Amendments to the
Regulations
Accordingly, 26 CFR parts 1, 25, 26
and 301 are proposed to be amended as
follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read as follows:
Authority: 26 U.S.C. 7805* * *
Sections 1.529A–1 through 1.529A–7
also issued under 26 U.S.C. 529A(g).* * *
Par. 2. Section 1.511–2 is amended by
adding paragraph (e) to read as follows:
§ 1.511–2 Organizations subject to tax.
*****
(e) ABLE programs—(1) Unrelated
business taxable income. A qualified
ABLE program described in section 529A
generally is exempt from income taxation,
but is subject to taxes imposed by section
511 relating to the imposition of tax on
unrelated business income. A qualified
ABLE program is required to file Form
990-T, “Exempt Organization Business
Income Tax Return,” if such filing would
be required under the rules of §§1.6012–
2(e) and 1.6012–3(a)(5) if the ABLE pro-

July 6, 2015

gram were an organization described in
those sections.
(2) Effective/applicability dates. This
paragraph (e) applies to taxable years beginning after December 31, 2014.
Par. 3. Section 1.513–1 is amended by
adding Example 4 to paragraph (d)(4)(i) to
read as follows:
§ 1.513–1 Definition of unrelated trade
or business.
*****
(d) * * *
(4) * * *
(i) * * *
Example 4. P is a qualified ABLE program described in section 529A. P receives amounts in order
to open or maintain ABLE accounts, as administrative or maintenance fees and other similar fees including service charges. Because the payment of
these amounts are essential to the operation of a
qualified ABLE program, the income generated from
the activity does not constitute gross income from an
unrelated trade or business.

*****
Par. 4. An undesignated center heading
is
added
immediately
following
§ 1.528 –10 and §§1.529A– 0 through
1.529A–7 are added to read as follows:
Sec.
*****
QUALIFIED ABLE PROGRAMS
1.529A– 0 Table of contents.
1.529A–1 Exempt status of qualified
ABLE program and definitions.
1.529A–2 Qualified ABLE program.
1.529A–3 Tax treatment.
1.529A– 4 Gift, estate, and generationskipping transfer taxes.
1.529A–5 Reporting of the establishment of and contributions to an ABLE
account.
1.529A– 6 Reporting of distributions
from and termination of an ABLE account.
1.529A–7 Electronic furnishing of
statements to designated beneficiaries and
contributors.
*****
§ 1.529A– 0 Table of contents.
This section lists the following captions contained in §§1.529A–1 through
1.529A–7.

July 6, 2015

§ 1.529A–1 Exempt status of qualified
ABLE program and definitions.
(a) In general.
(b) Definitions.
(1) ABLE account.
(2) Contracting State.
(3) Contribution.
(4) Designated beneficiary.
(5) Disability certification.
(6) Distribution.
(7) Earnings.
(8) Earnings ratio.
(9) Eligible individual.
(10) Excess contribution.
(11) Excess aggregate contribution.
(12) Investment in the account.
(13) Member of the family.
(14) Program-to-program transfer.
(15) Qualified ABLE program.
(16) Qualified disability expenses.
(17) Rollover.
(c) Effective/applicability date.
§ 1.529A–2 Qualified ABLE program.
(a) In general.
(b) Established and maintained by a
State or agency or instrumentality of a
State.
(1) Established.
(2) Maintained.
(3) Community Development Financial Institutions (CDFIs).
(c) Establishment of an ABLE account.
(1) In general.
(2) Only one ABLE account.
(3) Beneficial interest.
(d) Eligible individual.
(1) In general.
(2) Frequency of recertification.
(3) Loss of qualification as an eligible
individual.
(e) Disability certification.
(1) In general.
(2) Marked and severe functional limitations.
(3) Compassionate allowance list.
(4) Additional guidance.
(5) Restriction on use of certification.
(f) Change of designated beneficiary.
(g) Contributions.
(1) Permissible property.
(2) Annual contributions limit.
(3) Cumulative limit.
(4) Return of excess contributions and
excess aggregate contributions.

52

(h) Qualified disability expenses.
(1) In general.
(2) Example.
(i) Separate accounting.
(j) Program-to-program transfers.
(k) Carryover of attributes.
(l) Investment direction.
(m) No pledging of interest as security.
(n) No sale or exchange.
(o) Change of residence.
(p) Post-death payments.
(q) Reporting requirements.
(r) Effective/applicability date.
§ 1.529A–3 Tax treatment.
(a) Taxation of distributions.
(b) Additional exclusions from gross
income.
(1) Rollover.
(2) Program-to-program transfers.
(3) Change in designated beneficiary.
(4) Payments to creditors post-death.
(c) Computation of earnings.
(d) Additional tax on amounts includible in gross income.
(1) In general.
(2) Exceptions.
(e) Tax on excess contributions.
(f) Filing requirements.
(g) Effective/applicability date.
§ 1.529A– 4 Gift, estate, and generationskipping transfer taxes.
(a) Contributions.
(1) In general.
(2) Generation-skipping transfer (GST)
tax.
(3) Designated beneficiary as contributor.
(b) Distributions.
(c) Change of designated beneficiary.
(d) Transfer tax on death of designated
beneficiary.
(e) Effective/applicability date.
§ 1.529A–5 Reporting of the
establishment of and contributions to an
ABLE account.
(a) In general.
(b) Additional definitions.
(1) Filer.
(2) TIN.
(c) Requirement to file return.
(1) Form of return.
(2) Information included on return.

Bulletin No. 2015–27

(3) Time and manner of filing return.
(d) Requirement to furnish statement.
(1) In general.
(2) Time and manner of furnishing
statement.
(3) Copy of Form 5498 –QA.
(e) Request for TIN of designated beneficiary.
(f) Penalties.
(1) Failure to file return.
(2) Failure to furnish TIN.
(g) Effective/applicability date.
§ 1.529A– 6 Reporting of distributions
from and termination of an ABLE
account.
(a) In general.
(b) Requirement to file return.
(1) Form of return.
(2) Information included on return.
(3) Time and manner of filing return.
(c) Requirement to furnish statement.
(1) In general.
(2) Time and manner of furnishing
statement.
(3) Copy of Form 1099-QA.
(d) Request for TIN of contributor(s).
(e) Penalties.
(1) Failure to file return.
(2) Failure to furnish TIN.
(f) Effective/applicability date.
§ 1.529A–7 Electronic furnishing of
statements to designated beneficiaries
and contributors.
(a) Electronic furnishing of statements.
(1) In general.
(2) Consent.
(3) Required disclosures.
(4) Format.
(5) Notice.
(6) Access period.
(b) Effective/applicability date.
§ 1.529A–1 Exempt status of qualified
ABLE program and definitions.
(a) In general. A qualified ABLE program described in section 529A is exempt
from income tax, except for the tax imposed under section 511 on the unrelated
business taxable income of that program.
(b) Definitions. For purposes of section
529A, this section and §§ 1.529A–2
through 1.529A–7—

Bulletin No. 2015–27

(1) ABLE account means an account
established under a qualified ABLE program and owned by the designated beneficiary of that account.
(2) Contracting State means a State
without a qualified ABLE program of its
own, which, in order to make ABLE accounts available to its residents who are
eligible individuals, contracts with another State having such a program.
(3) Contribution means any payment
directly allocated to an ABLE account for
the benefit of a designated beneficiary.
(4) Designated beneficiary means the
individual who is the owner of the ABLE
account and who either established the
account at a time when he or she was an
eligible individual or who has succeeded
the former designated beneficiary in that
capacity (successor designated beneficiary). If the designated beneficiary is not
able to exercise signature authority over
his or her ABLE account or chooses to
establish an ABLE account but not exercise signature authority, references to the
designated beneficiary with respect to his
or her actions include actions by the designated beneficiary’s agent under a power
of attorney or, if none, a parent or legal
guardian of the designated beneficiary.
(5) Disability certification means a certification deemed sufficient by the Secretary to establish a certain level of physical
or mental impairment that meets the requirements described in § 1.529A–2(e).
(6) Distribution means any payment
from an ABLE account. A program-toprogram transfer is not a distribution.
(7) Earnings attributable to an account
are the excess of the total account balance
on a particular date over the investment in
the account as of that date.
(8) Earnings ratio means the amount
of earnings attributable to the account as
of the last day of the calendar year in
which the designated beneficiary’s taxable
year begins, divided by the total account
balance on that same date, after taking
into account all distributions made during
that calendar year and all contributions
received during that same year other than
those (if any) returned in accordance with
§ 1.529A–2(g)(4).
(9) Eligible individual for a taxable
year means an individual who either:
(i) Is entitled during that taxable year to
benefits based on blindness or disability

53

under title II or XVI of the Social Security
Act, provided that such blindness or disability occurred before the date on which
the individual attained age 26 (and, for
this purpose, an individual is deemed to
attain age 26 on his or her 26th birthday);
or
(ii) Is the subject of a disability certification filed with the Secretary for that
taxable year.
(10) Excess contribution means the
amount by which the amount contributed
during the taxable year of the designated
beneficiary to an ABLE account exceeds
the limit in effect under section 2503(b)
for the calendar year in which the taxable
year of the designated beneficiary begins.
(11) Excess aggregate contribution
means the amount contributed during the
taxable year of the designated beneficiary
that causes the total of amounts contributed since the establishment of the ABLE
account (or of an ABLE account for the
same designated beneficiary that was
rolled into the current ABLE account) to
exceed the limit in effect under section
529(b)(6). In the context of the safe harbor
in § 1.529A–2(g)(3), however, excess aggregate contribution means a contribution
that causes the account balance to exceed
the limit in effect under section 529(b)(6).
(12) Investment in the account means
the sum of all contributions made to the
account, reduced by the aggregate amount
of contributions included in distributions,
if any, made from the account. In the case
of a rollover into an ABLE account the
amount included as investment in the recipient account is not the full amount of
the rollover contribution, but instead is
equal to the amount of the rollover contribution that constituted the investment in
the account from which the rollover was
made.
(13) Member of the family means a
sibling, whether by blood or by adoption.
Such term includes a brother, sister, stepbrother, stepsister, half-brother, and halfsister.
(14) Program-to-program transfer
means the direct transfer of the entire balance of an ABLE account into an ABLE
account of the same designated beneficiary in which the transferor ABLE account is closed upon completion of the
transfer, or of part or all of the balance to
an ABLE account of another eligible in-

July 6, 2015

dividual who is a member of the family of
the former designated beneficiary, without
any intervening distribution or deemed
distribution to the designated beneficiary.
(15) Qualified ABLE program means a
program established and maintained by a
State, or agency or instrumentality of a
State, under which an ABLE account may
be established by and for the benefit of the
account’s designated beneficiary who is
an eligible individual, and that meets the
requirements described in § 1.529A–2.
(16) Qualified disability expenses
means any expenses incurred at a time
when the designated beneficiary is an eligible individual that relate to the blindness or disability of the designated beneficiary of an ABLE account, including
expenses that are for the benefit of the
designated beneficiary in maintaining or
improving his or her health, independence, or quality of life. See § 1.529A–
2(h). Any expenses incurred at a time
when a designated beneficiary is neither
disabled nor blind within the meaning of
§ 1.529A–1(b)(9)(i) or § 1.529A–2(e)(i)
are not qualified disability expenses.
(17) Rollover means a contribution to
an ABLE account of a designated beneficiary (or of an eligible individual who is a
member of the family of the designated
beneficiary) of all or a portion of an
amount withdrawn from the designated
beneficiary’s ABLE account, provided the
contribution is made within 60 days of the
date of the withdrawal and, in the case of
a rollover to the designated beneficiary’s
ABLE account, no rollover has been made
to an ABLE account of the designated
beneficiary within the prior 12 months.
(c) Effective/applicability date. This
section applies to taxable years beginning
after December 31, 2014.
§ 1.529A–2 Qualified ABLE program.
(a) In general. A qualified ABLE program is a program established and maintained by a State, or an agency or instrumentality of a State, that satisfies all of the
requirements of this section and under
which—
(1) An ABLE account may be established for the purpose of meeting the qualified disability expenses of the designated
beneficiary of the account;

July 6, 2015

(2) The designated beneficiary must be
a resident of such State or a resident of a
Contracting State (as residence is determined under the law of the State of the
designated beneficiary’s residence);
(3) A designated beneficiary is limited
to only one ABLE account at a time except as otherwise provided with respect to
program-to-program transfers and rollovers;
(4) Any person may make contributions to such an ABLE account, subject to
the limitations described in paragraph (g)
of this section; and
(5) Distributions (other than rollovers
and returns of contributions as described
in paragraph (g)(4) of this section) may be
made only to or for the benefit of the
designated beneficiary of the ABLE account.
(b) Established and maintained by a
State or agency or instrumentality of a
State—(1) Established. A program is established by a State or its agency or instrumentality if the program is initiated by
State statute or regulation or by an act of
a State official or agency with the authority to act on behalf of the State.
(2) Maintained. A program is maintained by a State or an agency or instrumentality of a State if—
(i) The State or its agency or instrumentality sets all of the terms and conditions of the program, including but not
limited to who may contribute to the program, who may be a designated beneficiary of the program, and what benefits
the program may provide; and
(ii) The State or its agency or instrumentality is actively involved on an ongoing basis in the administration of the program,
including
supervising
the
implementation of decisions relating to
the investment of assets contributed under
the program. Factors that are relevant in
determining whether a State or its agency
or instrumentality is actively involved in
the administration of the program include,
but are not limited to: whether the State or
its agency or instrumentality provides services to designated beneficiaries that are
not provided to persons who are not designated beneficiaries; whether the State or
its agency or instrumentality establishes
detailed operating rules for administering
the program; whether officials of the State
or its agency or instrumentality play a

54

substantial role in the operation of the
program, including selecting, supervising,
monitoring, auditing, and terminating the
relationship with any private contractors
that provide services under the program;
whether the State or its agency or instrumentality holds the private contractors
that provide services under the program to
the same standards and requirements that
apply when private contractors handle
funds that belong to the State or its agency
or instrumentality or provide services to
the State or its agency or instrumentality;
whether the State or its agency or instrumentality provides funding for the program; and whether the State or its agency
or instrumentality acts as trustee or holds
program assets directly or for the benefit
of the designated beneficiaries. For example, if the State or its agency or instrumentality thereof exercises the same authority
over the funds invested in the program as
it does over the investments in or pool of
funds of a State employees’ defined benefit pension plan, then the State or its
agency or instrumentality will be considered actively involved on an ongoing basis in the administration of the program.
(3) Community Development Financial
Institutions (CDFIs). Some or all of the
services described in paragraphs (b)(2)(i)
and (ii) of this section may be performed
by one or more Community Development
Financial Institutions (CDFIs) with whom
the State (or its agency or instrumentality)
contracts for that purpose.
(c) Establishment of an ABLE account—(1) In general. Except as otherwise provided in this paragraph (c), a
qualified ABLE program must provide
that an ABLE account may be established
only for an eligible individual under a
qualified ABLE program of the State in
which the eligible individual is a resident.
The qualified ABLE program also may
allow the establishment of an ABLE account for an eligible individual who is a
resident of a Contracting State as defined
in § 1.529A–1(b)(2). If an eligible individual is unable to establish an ABLE
account on his or her own behalf, the
ABLE account may be established on behalf of the eligible individual by the eligible individual’s agent under a power of
attorney or, if none, by a parent or legal
guardian of the eligible individual.

Bulletin No. 2015–27

(2) Only one ABLE account—(i) In
general. Except in the case of rollovers or
program-to-program transfers, a designated beneficiary is limited to one ABLE
account at a time, regardless of where
located. To ensure that this requirement is
met, a qualified ABLE program must obtain a verification, signed under penalties
of perjury, that the eligible individual has
no other existing ABLE account (other
than an ABLE account that will terminate
with the rollover or program-to-program
transfer into the new ABLE account) before that program can permit the establishment of an ABLE account for that eligible
individual. In the case of a rollover, the
ABLE account from which amounts were
rolled must be closed as of the 60th day
after the amount was distributed from the
ABLE account in order for the account
that received the rollover to be treated as
an ABLE account.
(ii) Treatment of additional accounts.
Except in the case of rollovers or
program-to-program transfers, if an
ABLE account is established for a designated beneficiary who already has an
ABLE account in existence, an additional
account will not be treated as an ABLE
account. However, if all contributions
made to that account are returned in accordance with the rules that apply to excess contributions and excess aggregate
contributions under paragraph (g)(4) of
this section, the additional account will be
treated as never having been established.
(3) Beneficial interest. The eligible individual for whose benefit an ABLE account is established is the designated beneficiary of the account. A person other
than the designated beneficiary with signature authority over the account of the
designated beneficiary may neither have
nor acquire any beneficial interest in the
account during the lifetime of the designated beneficiary and must administer the
account for the benefit of the designated
beneficiary of the account.
(d) Eligible individual—(1) In general.
Whether an individual is an eligible individual (as defined in § 1.529A–1(b)(9)) is
determined for each taxable year, and that
determination applies for the entire year.
A qualified ABLE program must specify
the documentation that an individual must
provide, both at the time an ABLE account is established for that individual and

Bulletin No. 2015–27

thereafter, in order to ensure that the designated beneficiary of the ABLE account
is, and continues to be, an eligible individual. For purposes of determining
whether an individual is an eligible individual, a disability certification will be
deemed to be filed with the Secretary once
the qualified ABLE program has received
the disability certification (as described in
paragraph (e) of this section) or a disability certification has been deemed to have
been received under the rules of the qualified ABLE program, which information
the qualified ABLE program will file in
accordance with the filing requirements
under § 1.529A–5(c)(2)(iv).
(2) Frequency of recertification—(i) In
general. A qualified ABLE program may
choose different methods of ensuring a
designated beneficiary’s status as an eligible individual and may impose different
periodic recertification requirements for
different types of impairments.
(ii) Considerations. In developing its
rules on recertification, a qualified ABLE
program may take into consideration
whether an impairment is incurable and, if
so, the likelihood that a cure may be found
in the future. For example, a qualified
ABLE program may provide that the initial certification will be deemed to be
valid for a stated number of years, which
may vary with the type of impairment. If
the qualified ABLE program imposes an
enforceable obligation on the designated
beneficiary or other person with signature
authority over the ABLE account to
promptly report changes in the designated
beneficiary’s condition that would result
in the designated beneficiary’s failing to
satisfy the definition of eligible individual, the program also may provide that a
certification is valid until the end of the
taxable year in which the change in the
designated beneficiary’s condition occurred.
(3) Loss of qualification as an eligible
individual. If the designated beneficiary of
an ABLE account ceases to be an eligible
individual, then for each taxable year in
which the designated beneficiary is not an
eligible individual, the account will continue to be an ABLE account, the designated beneficiary will continue to be the
designated beneficiary of the ABLE account (and will be referred to as such), and
the ABLE account will not be deemed to

55

have been distributed. However, beginning on the first day of the designated
beneficiary’s first taxable year for which
the designated beneficiary does not satisfy
the definition of an eligible individual,
additional contributions to the designated
beneficiary’s ABLE account must not be
accepted by the qualified ABLE program.
Additionally, no amounts incurred during
that year and each subsequent year in
which the designated beneficiary does not
satisfy the definition of an eligible individual will be qualified disability expenses. If the designated beneficiary subsequently again becomes an eligible
individual, contributions to the designated
beneficiary’s ABLE account again may be
accepted subject to the contribution limits
under section 529A, and expenses incurred that meet the definition of a qualified disability expense will be qualified
disability expenses.
(e) Disability certification—(1) In general. Except as provided in paragraph
(e)(3) of this section or additional guidance described in paragraph (e)(4) of this
section, a disability certification with respect to an individual is a certification
signed under penalties of perjury by the
individual, or by the other individual establishing (or with signature authority
over) the ABLE account for the individual, that—
(i) The individual—
(A) Has a medically determinable
physical or mental impairment that results
in marked and severe functional limitations (as defined in paragraph (e)(2) of
this section), and that—
(1) Can be expected to result in death;
or
(2) Has lasted or can be expected to last
for a continuous period of not less than 12
months; or
(B) Is blind (within the meaning of
section 1614(a)(2) of the Social Security
Act);
(ii) Such blindness or disability occurred before the date on which the individual attained age 26 (and, for this purpose, an individual is deemed to attain age
26 on his or her 26th birthday); and
(iii) Includes a copy of the individual’s
diagnosis relating to the individual’s relevant impairment or impairments, signed
by a physician meeting the criteria of sec-

July 6, 2015

tion 1861(r)(1) of the Social Security Act
(42 U.S.C. 1395x(r)).
(2) Marked and severe functional limitations. For purposes of paragraph (e)(1)
of this section, the phrase “marked and
severe functional limitations” means the
standard of disability in the Social Security Act for children claiming Supplemental Security Income for the Aged, Blind,
and Disabled (SSI) benefits based on disability (see 20 CFR 416.906). Specifically, this is a level of severity that meets,
medically equals, or functionally equals
the severity of any listing in appendix 1 of
subpart P of 20 CFR part 404, but without
regard to age. (See 20 CFR 416.906,
416.924 and 416.926a.) Such phrase also
includes any impairment or standard of
disability identified in future guidance
published in the Internal Revenue Bulletin
(see §601.601(d)(2) of this chapter). Consistent with the regulations of the Social
Security Administration, the level of severity is determined by taking into account the effect of the individual’s prescribed treatment. (See 20 CFR 416.930.)
(3) Compassionate allowance list.
Conditions listed in the “List of
Compassionate Allowances Conditions”
maintained by the Social Security Administration (at www.socialsecurity.gov/
compassionateallowances/conditions.htm)
are deemed to meet the requirements of
section 529A(e)(1)(B) regarding the filing
of a disability certification, if the condition was present before the date on which
the individual attained age 26. To establish that an individual with such a condition meets the definition of an eligible
individual, the individual must identify
the condition and certify to the qualified
ABLE program both the presence of the
condition and its onset prior to age 26, in
a manner specified by the qualified ABLE
program.
(4) Additional guidance. Additional
guidance on conditions deemed to meet
the requirements of section 529A(e)(1)(B)
may be identified in future guidance published in the Internal Revenue Bulletin.
See § 601.601(d)(2) of this chapter.
(5) Restriction on use of certification.
No inference may be drawn from a disability certification described in this paragraph (e) for purposes of establishing eligibility for benefits under title II, XVI, or
XIX of the Social Security Act.

July 6, 2015

(f) Change of designated beneficiary.
A qualified ABLE program must permit a
change in the designated beneficiary of an
ABLE account, but only during the life of
the designated beneficiary. At the time of
the change, the successor designated beneficiary must be an eligible individual.
(g) Contributions—(1) Permissible
property. Except in the case of programto-program transfers, contributions to an
ABLE account may only be made in cash.
A qualified ABLE program may allow
cash contributions to be made in the form
of a check, money order, credit card, electronic transfer, or similar method.
(2) Annual contributions limit. A qualified ABLE program must provide that no
contribution to an ABLE account will be
accepted to the extent such contribution,
when added to all other contributions
(whether from the designated beneficiary
or one or more other persons) to that
ABLE account made during the designated beneficiary’s taxable year causes the
total of such contributions to exceed the
amount in effect under section 2503(b) for
the calendar year in which the designated
beneficiary’s taxable year begins. For this
purpose, contributions do not include rollovers or program-to-program transfers.
(3) Cumulative limit—(i) In general. A
qualified ABLE program maintained by a
State or its agency or instrumentality must
provide adequate safeguards to prevent
aggregate contributions on behalf of a
designated beneficiary in excess of the
limit established by that State under section 529(b)(6). For purposes of the preceding sentence, aggregate contributions
include contributions to any prior ABLE
account maintained by any State or its
agency or instrumentality for the same
designated beneficiary or any prior designated beneficiary.
(ii) Safe harbor. A qualified ABLE
program maintained by a State or its
agency or instrumentality satisfies the requirement in paragraph (g)(3)(i) of this
section if it refuses to accept any additional contribution to an ABLE account
once the balance in that account reaches
the limit established by that State under
section 529(b)(6). Once the account balance falls below such limit, additional
contributions again may be accepted, subject to the limits under this paragraph
(g)(3)(i) of this section.

56

(4) Return of excess contributions and
excess aggregate contributions. If an excess contribution as defined in § 1.529A–
1(b)(10) or an excess aggregate contribution as defined in § 1.529A–1(b)(11) is
allocated to or deposited into the ABLE
account of a designated beneficiary, a
qualified ABLE program must return that
excess contribution or excess aggregate
contribution, including all net income attributable to that excess contribution or
excess aggregate contribution, as determined under the rules set forth in
§ 1.408 –11 (treating an IRA as an ABLE
account and returned contributions under
section 408(d)(4) as excess contributions
or excess aggregate contributions), to the
person or persons who made that contribution. An excess contribution or excess
aggregate contribution must be returned to
its contributor(s) on a last-in-first-out basis until the entire excess contribution or
excess aggregate contribution, along with
all net income attributable to such contribution, has been returned. Returned contributions must be received by the contributor(s) on or before the due date
(including extensions) for the Federal income tax return of the designated beneficiary for the taxable year in which the
excess contribution or excess aggregate
contribution was made. See § 1.529A–
3(e) for income tax considerations for the
contributor(s). If an excess contribution or
excess aggregate contribution and the net
income attributable to the excess contribution or excess aggregate contribution
are returned to a contributor other than the
designated beneficiary, the qualified
ABLE program must notify the designated beneficiary of such return at the
time of the return.
(h) Qualified disability expenses—(1)
In general. Qualified disability expenses,
as defined in § 1.529A–1(b)(16), are expenses incurred that relate to the blindness
or disability of the designated beneficiary
of the ABLE account and are for the benefit of that designated beneficiary in maintaining or improving his or her health,
independence, or quality of life. Such expenses include, but are not limited to, expenses related to the designated beneficiary’s education, housing, transportation,
employment training and support, assistive technology and related services, personal support services, health, prevention

Bulletin No. 2015–27

and wellness, financial management and
administrative services, legal fees, expenses for oversight and monitoring, and
funeral and burial expenses, as well as
other expenses that may be identified from
time to time in future guidance published
in the Internal Revenue Bulletin. See
§ 601.601(d)(2) of this chapter. Qualified
disability expenses include basic living
expenses and are not limited to items for
which there is a medical necessity or
which solely benefit a disabled individual.
A qualified ABLE program must establish
safeguards to distinguish between distributions used for the payment of qualified
disability expenses and other distributions, and to permit the identification of
the amounts distributed for housing expenses as that term is defined for purposes
of the Supplemental Security Income program of the Social Security Administration.
(2) Example. The following example
illustrates this paragraph (h):
Example. B, an individual, has a medically determined mental impairment that causes marked and
severe limitations on her ability to navigate and
communicate. A smart phone would enable B to
navigate and communicate more safely and effectively, thereby helping her to maintain her independence and to improve her quality of life. Therefore,
the expense of buying, using, and maintaining a
smart phone that is used by B would be considered a
qualified disability expense.

(i) Separate accounting. A program
will not be treated as a qualified ABLE
program unless it provides separate accounting for each ABLE account. Separate accounting requires that contributions
for the benefit of a designated beneficiary
and any earnings attributable thereto must
be allocated to that designated beneficiary’s account. Whether or not a program
provides each designated beneficiary an
annual account statement showing the total account balance, the investment in the
account, the accrued earnings, and the distributions from the account, the program
must give this information to the designated beneficiary upon request.
(j) Program-to-program transfers. A
qualified ABLE program may permit a
change of qualified ABLE program or a
change of designated beneficiary by
means of a program-to-program transfer
as defined in § 1.529A–1(b)(14). In that
event, subject to any contrary provisions
or limitations adopted by the qualified
ABLE program, rules similar to the rules

Bulletin No. 2015–27

of § 1.401(a)(31)–1, Q&A-3 and 4 (which
apply for purposes of a direct rollover
from a qualified plan to an eligible retirement plan) apply for purposes of determining whether an amount is paid in the
form of a program-to-program transfer.
(k) Carryover of attributes. Upon a
rollover or program-to-program transfer,
all of the attributes of the former ABLE
account relevant for purposes of calculating the investment in the account and applying the annual and cumulative limits
on contributions are applicable to the recipient ABLE account. The portion of the
rollover or transfer amount that constituted investment in the account from
which the distribution or transfer was
made is added to investment in the recipient ABLE account. Similarly, the portion
of the rollover or transfer amount that
constituted earnings of the account from
which the distribution or transfer was
made is added to the earnings of the recipient ABLE account.
(l) Investment direction. A program
will not be treated as a qualified ABLE
program unless it provides that the designated beneficiary of an ABLE account
established under such program may direct, whether directly or indirectly, the
investment of any contributions to the
program (or any earnings thereon) no
more than two times in any calendar year.
(m) No pledging of interest as security.
A program will not be treated as a qualified ABLE program unless the terms of
the program, or a state statute or regulation that governs the program, prohibit
any interest in the program or any portion
thereof from being used as security for a
loan. This restriction includes, but is not
limited to, a prohibition on the use of any
interest in the ABLE program as security
for a loan used to purchase such interest in
the program.
(n) No sale or exchange. A qualified
ABLE program must ensure that no interest in an ABLE account may be sold or
exchanged.
(o) Change of residence. A qualified
ABLE program may continue to maintain
the ABLE account of a designated beneficiary after that designated beneficiary
changes his or her residence to another
State.
(p) Post-death payments. A qualified
ABLE program must provide that a por-

57

tion or all of the balance remaining in the
ABLE account of a deceased designated
beneficiary must be distributed to a State
that files a claim against the designated
beneficiary or the ABLE account itself
with respect to benefits provided to the
designated beneficiary under that State’s
Medicaid plan established under title XIX
of the Social Security Act. The payment
of such claim (if any) will be made only
after providing for the payment from the
designated beneficiary’s ABLE account of
all outstanding payments due for his or
her qualified disability expenses, and will
be limited to the amount of the total medical assistance paid for the designated
beneficiary after the establishment of the
ABLE account (the date on which the
ABLE account, or any ABLE account
from which amounts were rolled or transferred to the ABLE account of the same
designated beneficiary, was opened) over
the amount of any premiums paid,
whether from the ABLE account or otherwise by or on behalf of the designated
beneficiary, to a Medicaid Buy-In program under any such State Medicaid plan.
(q) Reporting requirements. A qualified ABLE program must comply with all
applicable reporting requirements, including without limitation those described in
§§ 1.529A–5 through 1.529A-7.
(r) Effective/applicability dates. This
section applies to taxable years beginning
after December 31, 2014.
§ 1.529A–3 Tax treatment.
(a) Taxation of distributions. Each distribution from an ABLE account consists
of earnings (computed in accordance with
paragraph (c) of this section) and investment in the account. If the total amount
distributed from an ABLE account to or
for the benefit of the designated beneficiary of that ABLE account during his or
her taxable year does not exceed the qualified disability expenses of the designated
beneficiary for that year, no amount distributed is includible in the gross income
of the designated beneficiary for that year.
If the total amount distributed from an
ABLE account to or for the benefit of the
designated beneficiary of that ABLE account during his or her taxable year exceeds the qualified disability expenses of
the designated beneficiary for that year,

July 6, 2015

the distributions from the ABLE account,
except to the extent excluded from gross
income under this section or any other
provision of chapter 1 of the Internal Revenue Code, must be included in the gross
income of the designated beneficiary in
the manner provided under this section
and section 72. In such a case, the earnings portion of the distribution includible
in gross income is equal to the earnings
portion of the distribution reduced by an
amount that bears the same ratio to the
earnings portion as the amount of qualified disability expenses during the year
bears to the total distributions during the
year. For this purpose, all amounts relevant under section 72 are determined as of
December 31 of the year in which the
designated beneficiary’s taxable year begins, and all amounts distributed from an
ABLE account to or for the benefit of the
designated beneficiary during his or her
taxable year are treated as one distribution. If an excess contribution or excess
aggregate contribution is returned within
the time period required in § 1.529A–
2(g)(4), any net income distributed is includible in the gross income of the contributor(s) in the taxable year in which the
excess contribution or excess aggregate
contribution was made.
(b) Additional exclusions from gross
income—(1) Rollover. A rollover as defined in § 1.529A–1(b)(17) is not includible in gross income under paragraph (a)
of this section.
(2) Program-to-program transfers. A
program-to-program transfer as defined in
§ 1.529A–1(b)(14) is not a distribution
and is not includible in gross income under paragraph (a) of this section.
(3) Change of designated beneficiary—
(i) In general. A change of designated
beneficiary of an ABLE account is not
treated as a distribution for purposes of
section 529A, and is not includible in
gross income under paragraph (a) of this
section, if the successor designated beneficiary is—
(A) An eligible individual for such calendar year; and
(B) A member of the family of the
former designated beneficiary.
(ii) Other designated beneficiary
changes. In the case of any change of
designated beneficiary not described in
paragraph (b)(3)(i) of this section, the for-

July 6, 2015

mer designated beneficiary of that ABLE
account will be treated as having received
a distribution of the fair market value of
the assets in that ABLE account on the
date on which the change is made to the
new designated beneficiary.
(4) Payments to creditors post-death.
Distributions made after the death of the
designated beneficiary in payment of outstanding obligations due for qualified disability expenses of the designated beneficiary are not includible in the gross
income of the designated beneficiary or
his or her estate. Included among these
obligations is the post-death payment of
any part of a claim filed against the designated beneficiary or the ABLE account
by a State under a State Medicaid plan.
(c) Computation of earnings. The earnings portion of a distribution is equal to
the product of the amount of the distribution and the earnings ratio, as defined in
§ 1.529A–1(b)(8). The balance of the distribution (the amount of the distribution
minus the earnings portion of that distribution) is the portion of that distribution
that constitutes the return of investment in
the account.
(d) Additional tax on amounts includible in gross income—(1) In general. If
any amount of a distribution from an
ABLE account is includible in the gross
income of a person for any taxable year
under paragraph (a) of this section (the
“includible amount”), the tax imposed on
that person by Chapter 1 of the Internal
Revenue Code shall be increased by an
amount equal to 10 percent of the includible amount.
(2) Exceptions—(i) Distributions on or
after the death of the designated beneficiary. Paragraph (d)(1) of this section
does not apply to any distribution made
from the ABLE account on or after the
death of the designated beneficiary to the
estate of the designated beneficiary, to an
heir or legatee of the designated beneficiary, or to a creditor described in paragraph (b)(4) of this section.
(ii) Returned excess contributions and
additional accounts. Paragraph (d)(1) of this
section does not apply to any return made in
accordance with § 1.529A–2(g)(4) of an excess contribution, excess aggregate contribution, or additional account.
(e) Tax on excess contributions. Under
section 4973(h), a contribution to an

58

ABLE account in excess of the annual
contributions limit described in § 1.529A–
2(g)(2) is subject to an excise tax in an
amount equal to 6 percent of the excess
contribution. However, if the excess contribution is returned in accordance with
the provisions of § 1.529A–2(g)(4), it is
treated as an amount not contributed.
(f) Filing requirements. A qualified
ABLE program is not required to file
Form 990, “Return of Organization Exempt From Income Tax,” Form 1041,
“U.S. Income Tax Return for Estates and
Trusts,” or Form 1120, “U.S. Corporation
Income Tax Return.” However, a qualified ABLE program is required to file
Form 990 –T, “Exempt Organization
Business Income Tax Return,” if such filing would be required under the rules of
§§ 1.6012–2(e) and 1.6012–3(a)(5) if the
ABLE program were an organization described in those sections.
(g) Effective/applicability dates. This
section applies to taxable years beginning
after December 31, 2014.
§ 1.529A– 4 Gift, estate, and generationskipping transfer taxes.
(a) Contributions—(1) In general.
Each contribution by a person to an ABLE
account other than by the designated beneficiary of that account is treated as a
completed gift to the designated beneficiary of the account for gift tax purposes.
Under the applicable gift tax rules, a contribution from a corporation, partnership,
trust, estate, or other entity is treated as a
gift by the shareholders, partners, or other
beneficial owners in proportion to their
respective ownership interests in the entity. See § 25.2511–1(c) and (h). A gift
into an ABLE account is not treated as
either a gift of a future interest in property,
or a qualified transfer under section
2503(e). To the extent a contributor’s gifts
to the designated beneficiary, including
gifts paid into the designated beneficiary’s
ABLE account, do not exceed the annual
limit in section 2503(b), the contribution
is not subject to gift tax. This provision,
however, does not change any other provision applicable to the transfer. For example, a contribution by the employer of
the designated beneficiary’s parent continues to constitute earned income to the

Bulletin No. 2015–27

parent and then a gift by the parent to the
designated beneficiary.
(2)
Generation-skipping
transfer
(GST) tax. To the extent the contribution
into an ABLE account is a nontaxable gift
for gift tax purposes, the inclusion ratio
for purposes of the GST tax will be zero
pursuant to section 2642(c)(1).
(3) Designated beneficiary as contributor. A designated beneficiary may make
a contribution to fund his or her own
ABLE account. That contribution is not a
gift. However, in the event of any change
of designated beneficiary, the portion of
the then fair market value of the ABLE
account attributable to that contribution
and any earnings attributable to that contribution will constitute a gift by the designated beneficiary to the successor designated beneficiary, and the usual gift and
GST tax rules will apply.
(b) Distributions. No distribution from
an ABLE account to or for the benefit of
the designated beneficiary is treated as a
taxable gift to that designated beneficiary.
(c) Change of designated beneficiary.
Neither gift tax nor generation-skipping
transfer tax applies to a change of designated beneficiary if the successor designated beneficiary is both an eligible individual and a member of the family (as
described in § 1.529A–1(b)(13)) of the
designated beneficiary. The previous sentence does not apply to any other change
of designated beneficiary.
(d) Transfer tax on death of designated
beneficiary. Upon the death of the designated beneficiary, the designated beneficiary’s ABLE account is includible in his
or her gross estate for estate tax purposes
under section 2031. The payment of outstanding qualified disability expenses and
the payment of certain claims made by a
State under its Medicaid plan may be deductible for estate tax purposes if the requirements of section 2053 are satisfied.
(e) Effective/applicability date. This
section applies to taxable years beginning
after December 31, 2014.
§ 1.529A–5 Reporting of the
establishment of and contributions
to an ABLE account.
(a) In general. A filer defined in paragraph (b)(1) of this section must, with
respect to each ABLE account—

Bulletin No. 2015–27

(1) File an annual information return,
as described in paragraph (c) of this section, with the Internal Revenue Service;
and
(2) Furnish an annual statement, as described in paragraph (d) of this section, to
the designated beneficiary of the ABLE
account.
(b) Additional definitions. In addition
to the definitions in § 1.529A–1(b), the
following definitions also apply for purposes of this section—
(1) Filer means the State or its agency
or instrumentality that establishes and
maintains the qualified ABLE program
under which an ABLE account is established. The filing may be done by either an
officer or employee of the State or its
agency or instrumentality having control
of the qualified ABLE program, or the
officer’s or employee’s designee.
(2) TIN means taxpayer identification
number as defined in section 7701(a)(41).
(c) Requirement to file return—(1)
Form of return. For purposes of reporting
the information described in paragraph
(c)(2) of this section, the filer must file
Form 5498-QA, “ABLE Account Contribution Information,” or any successor
form, together with Form 1096, “Annual
Summary and Transmittal of U.S. Information Returns.”
(2) Information included on return.
With respect to each ABLE account, the
filer must include on the return—
(i) The name, address, and TIN of the
designated beneficiary of the ABLE account;
(ii) The name, address, and TIN of the
filer;
(iii) Information regarding the establishment of the ABLE account, as required by the form and its instructions;
(iv) Information regarding the disability certification or other basis for eligibility of the designated beneficiary, as required by the form and its instructions.
For further information regarding eligibility and disability certification, see
§ 1.529A–2(d) and (e), respectively;
(v) The total amount of any contributions made with respect to the ABLE account during the calendar year;
(vi) The fair market value of the ABLE
account as of the last day of the calendar
year; and

59

(vii) Any other information required by
the form, its instructions, or published
guidance. See §§601.601(d) and 601.602
of this chapter.
(3) Time and manner of filing return—
(i) In general. Except as provided in paragraph (c)(3)(ii) of this section, the information returns required under this
paragraph must be filed on or before May
31 of the year following the calendar year
with respect to which the return is being
filed, in accordance with the forms and
their instructions.
(ii)
Extensions
of
time.
See
§§ 1.6081–1 and 1.6081– 8 of this chapter
for rules relating to extensions of time to
file information returns required in this
section.
(iii)
Electronic
filing.
See
§ 301.6011–2 of this chapter for rules
relating to electronic filing.
(iv) Substitute forms. The filer may file
the returns required under this paragraph
(c) on a substitute form. A substitute form
must comply with applicable revenue procedures (see § 601.601(d)(2) of this chapter) or other guidance published by the
IRS, including Publication 1179, “General
Rules and Specifications for Substitute
Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.”
(d) Requirement to furnish statement—
(1) In general. The filer must furnish a
statement to the designated beneficiary of
the ABLE account for which it is required
to file a Form 5498 –QA (or any successor
form). The statement must include—
(i) The information required under
paragraph (c)(2) of this section;
(ii) A legend that identifies the statement as important tax information that is
being furnished to the Internal Revenue
Service; and
(iii) The name and address of the office
or department of the filer that is the information contact for questions regarding the
ABLE account to which the Form
5498 –QA relates.
(2) Time and manner of furnishing
statement—(i) In general. Except as provided in paragraph (d)(2)(ii) of this section, the filer must furnish the statement
described in paragraph (d)(1) of this section to the designated beneficiary on or
before March 15 of the year following the
calendar year with respect to which the
statement is being furnished. If mailed,

July 6, 2015

the statement must be sent to the designated beneficiary’s last known address.
The statement may be furnished electronically, as provided in § 1.529A–7.
(ii) Extensions of time. The Internal
Revenue Service may grant an extension
of time to furnish statements required in
this section upon a showing of good
cause. See the instructions to Form 5498 –
QA.
(3) Copy of Form 5498 –QA. The filer
may satisfy the requirement of this paragraph (d) by furnishing either a copy of
Form 5498-QA (or successor form) or another document that contains the information required by paragraph (d)(1) of this
section, if the document complies with
applicable revenue procedures (see
§601.601(d)(2) of this chapter) or other
guidance published by the IRS relating to
substitute statements, including Publication 1179, “General Rules and Specifications for Substitute Forms 1096, 1098,
1099, 5498, and Certain Other Information Returns.”
(e) Request for TIN of designated beneficiary. The filer must request the TIN of
the designated beneficiary at the time the
ABLE account is opened if the filer does
not already have a record of the designated beneficiary’s correct TIN. The filer
must clearly notify the designated beneficiary that the law requires the designated
beneficiary to furnish a TIN so that it may
be included on an information return to be
filed by the filer. The designated beneficiary may provide his or her TIN in any
manner including orally, in writing, or
electronically. If the TIN is furnished in
writing, no particular form is required.
Form W–9, “Request for Taxpayer Identification Number and Certification,” may
be used, or the request may be incorporated into the forms related to the establishment of the ABLE account.
(f) Penalties—(1) Failure to file return. The section 6693 penalty may apply
to the filer that fails to file information
returns at the time and in the manner
required by this section, unless it is shown
that such failure is due to reasonable
cause. See section 6693 and the regulations thereunder.
(2) Failure to furnish TIN. The section
6723 penalty may apply to any designated
beneficiary who fails to furnish his or her
TIN to the filer. See section 6723, and the

July 6, 2015

regulations thereunder, for rules relating
to the penalty for failure to furnish a TIN.
(g) Effective/applicability date. The
rules of this section apply to information
returns required to be filed, and payee
statements required to be furnished, after
December 31, 2015.
§ 1.529A– 6 Reporting of distributions
from and termination of an ABLE
account.
(a) In general. The filer as defined in
§ 1.529A–5(b)(1) must, with respect to
each ABLE account from which any distribution is made or which is terminated
during the calendar year—
(1) File an annual information return,
as described paragraph (b) of this section,
with the Internal Revenue Service; and
(2) Furnish an annual statement, as described in paragraph (c) of this section, to
the designated beneficiary of the ABLE
account and to each contributor who received a returned contribution in accordance with § 1.529A–2(g)(4) attributable
to the calendar year.
(b) Requirement to file return—(1)
Form of return. For purposes of reporting
the information in paragraph (b)(2) of this
section, the filer must file Form 1099 –
QA, “Distributions from ABLE Accounts,” or any successor form, together
with Form 1096, “Annual Summary and
Transmittal of U.S. Information Returns.”
(2) Information included on return.
The filer must include on the return—
(i) The name, address, and TIN of the
designated beneficiary of the ABLE account or of any contributor who received a
returned contribution in accordance with
§ 1.529A–2(g)(4) attributable to the calendar year, as applicable;
(ii) The name, address, and TIN of the
filer;
(iii) The aggregate amount of distributions from the ABLE account during the
calendar year;
(iv) Information as to basis and earnings with respect to such distributions or
returns of contributions;
(v) Information regarding termination
(if any) of the ABLE account;
(vi) Information regarding each rollover and any program-to-program transfer
to or from the ABLE account during the
designated beneficiary’s taxable year;

60

(vii) Whether the return is being furnished to the designated beneficiary or to
a contributor; and
(viii) Any other information required
by the form, its instructions, or published
guidance. See §§ 601.601(d) and 601.602
of this chapter.
(3) Time and manner of filing return—
(i) In general. Except as provided in paragraph (b)(3)(ii) of this section, the Forms
1099 –QA and 1096 must be filed on or
before February 28 (March 31 if filing
electronically) of the year following the
calendar year with respect to which the
return is being filed, in accordance with
the forms and their instructions.
(ii) Extensions of time. See §§ 1.6081–1
and 1.6081–8 of this chapter for rules relating
to extensions of time to file information returns required in this section.
(iii) Electronic filing. See § 301.6011–2
of this chapter for rules relating to electronic
filing.
(iv) Substitute forms. The filer may file
the return required under this paragraph
(b) on a substitute form. A substitute form
must comply with applicable revenue procedures (see § 601.601(d)(2) of this chapter) or other guidance published by the
IRS, including Publication 1179, “General
Rules and Specifications for Substitute
Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.”
(c) Requirement to furnish statement—
(1) In general. The filer must furnish a
statement to the designated beneficiary
and each contributor (if any) of the ABLE
account for which it is required to file a
Form 1099 –QA (or any successor form).
The statement must include—
(i) The information required under
paragraph (b)(2) of this section.
(ii) A legend that identifies the statement as important tax information that is
being furnished to the Internal Revenue
Service;
(iii) The name and address of the office
or department of the filer that is the information contact for questions regarding the
ABLE account to which the Form
1099 –QA relates.
(2) Time and manner of furnishing
statement—(i) In general. Except as provided in paragraph (c)(2)(ii) of this section, a filer must furnish the statement
described in paragraph (c)(1) of this section to the designated beneficiary on or

Bulletin No. 2015–27

before January 31 of the year following
the calendar year with respect to which
the statement is being furnished. If
mailed, the statement must be sent to the
recipient’s last known address. The statement may be furnished electronically, as
provided in § 1.529A–7.
(ii) Extensions of time. The Internal
Revenue Service may grant an extension
of time to furnish statements required in
this section upon a showing of good
cause. See the instructions to Form 1099 –
QA.
(3) Copy of Form 1099 –QA. A filer
may satisfy the requirement of this paragraph (c) by furnishing either a copy of
Form 1099 –QA (or successor form) or
another document that contains the information required by paragraph (c)(1) of this
section and that complies with applicable
revenue procedures (see §601.601(d)(2) of
this chapter) or other guidance published by
the IRS relating to substitute statements, including Publication 1179, “General Rules
and Specifications for Substitute Forms
1096, 1098, 1099, 5498, and Certain Other
Information Returns.”
(d) Request for TIN of contributor(s).
A filer must request the TIN for each
contributor to the ABLE account at the
time a contribution is made, if the filer
does not already have a record of that
person’s correct TIN. The filer must
clearly notify each contributor to the account that the law requires that person to
furnish a TIN so that it may be included
on an information return to be filed by
the filer. The contributor may provide
his or her TIN in any manner including
orally, in writing, or electronically. If
the TIN is furnished in writing, no particular form is required. Form W–9,
“Request for Taxpayer Identification
Number and Certification,” may be
used, or the request may be incorporated
into the forms related to the establishment of the ABLE account.
(e) Penalties—(1) Failure to file return. The section 6693 penalty may apply
to a filer that fails to file information returns at the time and in the manner required by this section, unless it is shown
that such failure is due to reasonable
cause. See section 6693 and the regulations thereunder.
(2) Failure to furnish TIN. The section
6723 penalty may apply to any contributor

Bulletin No. 2015–27

who fails to furnish his or her TIN to the
filer. See section 6723, and the regulations
thereunder, for rules relating to the penalty for failure to furnish a TIN.
(f) Effective/applicability date. The
rules of this section apply to information
returns required to be filed, and payee
statements required to be furnished, after
December 31, 2015.
§ 1.529A–7 Electronic furnishing of
statements to designated beneficiaries
and contributors.
(a) Electronic furnishing of statements—(1) In general. A filer required
under § 1.529A–5 or § 1.529A– 6 of this
chapter to furnish a written statement to a
designated beneficiary of or contributor to
an ABLE account may furnish the statement in an electronic format in lieu of a
paper format. A filer who meets the requirements of paragraphs (a)(2) through
(6) of this section is treated as furnishing
the required statement.
(2) Consent—(i) In general. The recipient of the statement must have affirmatively consented to receive the statement
in an electronic format. The consent may
be made electronically in any manner that
reasonably demonstrates that the recipient
can access the statement in the electronic
format in which it will be furnished to the
recipient. Alternatively, the consent may
be made in a paper document if it is confirmed electronically.
(ii) Withdrawal of consent. The consent requirement of this paragraph (a)(2)
is not satisfied if the recipient withdraws
the consent and the withdrawal takes effect before the statement is furnished. The
filer may provide that a withdrawal of
consent takes effect either on the date it is
received by the filer or on another date no
more than 60 days later. The filer also may
provide that a request for a paper statement will be treated as a withdrawal of
consent.
(iii) Change in hardware or software
requirements. If a change in the hardware
or software required to access the statement creates a material risk that the recipient will not be able to access the statement, the filer must, prior to changing the
hardware or software, provide the recipient with a notice. The notice must describe the revised hardware and software

61

required to access the statement and inform the recipient that a new consent to
receive the statement in the revised electronic format must be provided to the filer
if the recipient does not want to withdraw
the consent. After implementing the revised hardware and software, the filer
must obtain from the recipient, in the
manner described in paragraph (a)(2)(i) of
this section, a new consent or confirmation of consent to receive the statement
electronically.
(iv) Examples. For purposes of the following examples that illustrate the rules of
this paragraph (a)(2), assume that the requirements of § 1.529A–7(a)(3) have been
met:
Example 1. Filer F sends Recipient R a letter
stating that R may consent to receive statements
required under § 1.529A–5 or § 1.529A– 6 electronically on a Web site instead of in a paper format. The
letter contains instructions explaining how to consent to receive the statements electronically by accessing the Web site, downloading the consent document, completing the consent document, and
e-mailing the completed consent back to F. The
consent document posted on the Web site uses the
same electronic format that F will use for the electronically furnished statements. R reads the instructions and submits the consent in the manner provided
in the instructions. R has consented to receive the
statements electronically in the manner described in
paragraph (a)(2)(i) of this section.
Example 2. Filer F sends Recipient R an e-mail
stating that R may consent to receive statements
required under § 1.529A–5 or § 1.529A– 6 electronically instead of in a paper format. The e-mail contains an attachment instructing R how to consent to
receive the statements electronically. The e-mail attachment uses the same electronic format that F will
use for the electronically furnished statements. R
opens the attachment, reads the instructions, and
submits the consent in the manner provided in the
instructions. R has consented to receive the statements electronically in the manner described in paragraph (a)(2)(i) of this section.
Example 3. Filer F posts a notice on its Web site
stating that Recipient R may receive statements required under § 1.529A–5 or § 1.529A– 6 electronically instead of in a paper format. The Web site
contains instructions on how R may access a secure
Web page and consent to receive the statements
electronically. By accessing the secure Web page
and giving consent, R has consented to receive the
statements electronically in the manner described in
paragraph (a)(2)(i) of this section.

(3) Required disclosures—(i) In general. Prior to, or at the time of, a recipient’s consent, the filer must provide to the
recipient a clear and conspicuous disclosure statement containing each of the disclosures described in paragraphs (a)(3)(ii)
through (viii) of this section.

July 6, 2015

(ii) Paper statement. The recipient
must be informed that the statement will
be furnished on paper if the recipient does
not consent to receive it electronically.
(iii) Scope and duration of consent.
The recipient must be informed of the
scope and duration of the consent. For
example, the recipient must be informed
whether the consent applies to statements
furnished every year after the consent is
given until it is withdrawn in the manner
described in paragraph (a)(3)(v)(A) of this
section, or only to the statement required
to be furnished on or before the due date
immediately following the date on which
the consent is given.
(iv) Post-consent request for a paper
statement. The recipient must be informed
of any procedure for obtaining a paper
copy of the recipient’s statement after giving the consent and whether a request for
a paper statement will be treated as a
withdrawal of consent.
(v) Withdrawal of consent. The recipient must be informed that—
(A) The recipient may withdraw a consent by writing (electronically or on paper) to the person or department whose
name, mailing address, and e-mail address
is provided in the disclosure statement;
(B) The filer will confirm, in writing
(either electronically or on paper), the
withdrawal and the date on which it takes
effect; and
(C) A withdrawal of consent does not
apply to a statement that was furnished
electronically in the manner described in
this paragraph (a) before the date on
which the withdrawal of consent takes
effect.
(vi) Notice of termination. The recipient must be informed of the conditions
under which a filer will cease furnishing
statements electronically to the recipient.
(vii) Updating information. The recipient must be informed of the procedures
for updating the information needed by
the filer to contact the recipient. The filer
must inform the recipient of any change in
the filer’s contact information.
(viii) Hardware and software requirements. The recipient must be provided
with a description of the hardware and
software required to access, print, and retain the statement, and the date when the
statement will no longer be available on
the Web site.

July 6, 2015

(4) Format. The electronic version of
the statement must contain all required
information and comply with applicable
revenue procedures or other guidance
published by the IRS relating to substitute
statements to recipients, including Publication 1179, “General Rules and Specifications for Substitute Forms 1096, 1098,
1099, 5498, and Certain Other Information Returns.”
(5) Notice—(i) In general. If the statement is furnished on a Web site, the filer
must notify the recipient that the statement is posted on a Web site. The notice
may be delivered by mail, electronic mail,
or in person. The notice must provide
instructions on how to access and print the
statement. The notice must include the
following statement in capital letters,
“IMPORTANT TAX RETURN DOCUMENT AVAILABLE.” If the notice is
provided by electronic mail, the foregoing
statement must be on the subject line of
the electronic mail.
(ii) Undeliverable electronic address.
If an electronic notice described in paragraph (a)(5)(i) of this section is returned
as undeliverable, and the correct electronic address cannot be obtained from the
filer’s records or from the recipient, then
the filer must furnish the notice by mail or
in person within 30 days after the electronic notice is returned.
(iii) Corrected statements. If the filer
has corrected a recipient’s statement that
was furnished electronically, the filer must
furnish the corrected statement to the recipient electronically. If the recipient’s
statement was furnished through a Web
site posting and the filer has corrected the
statement, the filer must notify the recipient that it has posted the corrected statement on the Web site within 30 days of
such posting in the manner described in
paragraph (a)(5)(i) of this section. The
corrected statement or the notice must be
furnished by mail or in person if—
(A) An electronic notice of the Web
site posting of an original statement or the
corrected statement was returned as undeliverable; and
(B) The recipient has not provided a
new e-mail address.
(6) Access period. Statements furnished on a Web site must be retained on
the Web site through October 15 of the
year following the calendar year to which

62

the statements relate (or the first business
day after such October 15 if October 15
falls on a Saturday, Sunday, or legal holiday). The filer must maintain access to
corrected statements that are posted on the
Web site through October 15 of the year
following the calendar year to which the
statements relate (or the first business day
after such October 15 if October 15 falls
on a Saturday, Sunday, or legal holiday)
or the date 90 days after the corrected
statements are posted, whichever is later.
The rules in this paragraph (a)(6) do not
replace the filer’s obligation to keep records under section 6001 and § 1.6001–
1(a) of this chapter.
(b) Effective/applicability date. This
section applies to statements required to
be furnished after December 31, 2015.
Part 25—GIFT TAXES
Par. 5. The authority citation for part
25 continues to read in part as follows:
Authority: 26 U.S.C. 7805* * *
Par. 6. Section 25.2501–1 is amended
by adding a sentence at the end of paragraph (a)(1) to read as follows:
§ 25.2501–1 Imposition of Tax.
(a) * * *
(1) * * * For gift tax rules related to an
ABLE account established under section
529A, see regulations promulgated thereunder.
*****
Par. 7. Section 25.2503–3 is amended
by adding a sentence at the end of paragraph (a) to read as follows:
§ 25.2503–3 Future interests in
property.
(a)* * * A contribution to an ABLE
account established under section 529A is
not a future interest.
*****
Par. 8. Section 25.2503– 6 is amended
by adding a sentence at the end of paragraph (a) to read as follows:

Bulletin No. 2015–27

§ 25.2503– 6 Exclusion for certain
qualified transfers to tuition or medical
expenses.
(a) * * * A contribution to an ABLE
account established under section 529A is
not a qualified transfer.
*****
Par. 9. Section 25.2511–2 is amended
by adding a sentence at the end of paragraph (a) to read as follows:
§ 25.2511–2 Cessation of donor’s
dominion and control.
(a) * * * For gift tax rules related to an
ABLE account established under section
529A, see regulations promulgated thereunder.
*****
Part 26 —ESTATE TAXES
Par. 10. The authority citation for part
26 continues to read in part as follows:

Bulletin No. 2015–27

Authority: 26 U.S.C. 7805* * *
Par. 11. Section 26.2642–1 is amended
by adding a sentence at the end of paragraph (a) to read as follows:
§ 26.2642–1 Inclusion ratio.
(a) * * * For generation-skipping transfer tax rules related to an ABLE account
established under section 529A, see regulations promulgated thereunder.
*****
Par. 12. Section 26.2652–1 is amended
by adding a sentence at the end of paragraph (a)(1) to read as follows:
§ 26.2652–1 Transferor defined; other
definitions.
(a) * * *
(1) * * * For generation-skipping transfer tax rules related to an ABLE account
established under section 529A, see regulations promulgated thereunder.
*****

63

Part 301—REPORTING AND
RECORDKEEPING REQUIREMENTS
Par. 13. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805* * *
§ 301.6011–2 [Amended]
Par. 14. Section 301.6011–2 is
amended by adding the word “series” after “5498” in the first sentence of paragraph (b)(1).

John Dalrymple
Deputy Commissioner for
Services and Enforcement.
(Filed by the Office of the Federal Register on June 19,
2015, 8:45 a.m., and published in the issue of the Federal
Register for June 22, 2015, 80 F.R. 35602)

July 6, 2015