The new law extends and expands ABLE account rules. ABLE accounts are tax-advantaged savings accounts for people with disabilities. Generally, the ABLE accounts are subject to Roth treatment—i.e., contributions are made with after-tax money, but distributions (that comply with specific ABLE account rules) are tax-free.

The ABLE account provisions in H.R.1 include indefinite extension (i.e., without an expiration date) of the ABLE account contribution limit. The base year for indexing the contribution limit is now 2026. The new law also eliminates the expiration date of the tax code provisions that allow individuals to claim the Savers tax credit based on qualified contributions to ABLE accounts, and that permit rollovers from section 529 education plans to ABLE accounts.

Prospects: These ABLE account rules are not expected to change in the foreseeable future.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org