Sponsors (17)
The bill permanently expands tax-favored saving routes for people with disabilities and their families—increasing and preserving disability-related savings—while producing modest federal revenue loss and risks of uneven uptake and short-term implementation complexity.
People with disabilities and their families can permanently roll unused 529 funds into ABLE accounts and contribute larger amounts to ABLE accounts, preserving and increasing tax-advantaged savings for disability-related expenses.
ABLE account contributions are treated as qualified retirement savings contributions and the bill removes a temporary cutoff for certain retirement-savings items, extending tax-preferred treatment for eligible savers beyond 2027.
Families and other contributors get simpler, more certain planning because the law removes the looming deadline for 529-to-ABLE rollovers, reducing urgency and administrative timing complexity.
Making these tax preferences permanent could modestly reduce federal revenue, creating pressure on other taxes or spending priorities.
Low-income or underserved people with disabilities may not fully benefit if outreach, account access, and support aren’t provided, leaving intended beneficiaries behind.
Taxpayers and families who expected the temporary rollover to expire may face longer-term constraints on 529 plan flexibility because funds moved to ABLE are limited to disability-related expenses.
Based on analysis of 3 sections of legislative text.
Permanently extends higher ABLE account contribution limits, makes 529-to-ABLE rollovers permanent, and treats ABLE contributions as qualified retirement savings contributions in the tax code.
Makes permanent two temporary tax rules that benefit people with disabilities: the higher annual contribution limit for ABLE accounts and the ability to roll 529 college savings funds into ABLE accounts. It also treats ABLE contributions as qualified retirement savings contributions for certain tax incentives and removes a proviso from the SECURE 2.0 Act so the Internal Revenue Code is applied as if that proviso never existed. The changes take effect for taxable years ending after enactment (and for 529-to-ABLE rollovers and distributions made after enactment).
Official title: Amend the Internal Revenue Code of 1986 to make certain provisions with respect to qualified ABLE programs permanent.
Introduced February 19, 2025 by Eric Stephen Schmitt · Last progress February 19, 2025