Sponsors (17)
The bill permanently expands and clarifies tax-favored saving options for people with disabilities and their families—improving long-term financial flexibility for disability-related expenses—while imposing modest federal revenue costs and requiring implementation steps and outreach to ensure equitable take-up.
People with disabilities can permanently contribute larger amounts to ABLE accounts, increasing their ability to save tax-advantaged funds for disability-related expenses.
People with disabilities and their families can permanently roll unused 529 funds into ABLE accounts and keep those funds tax-advantaged, preserving savings for disability-related expenses and avoiding taxable distributions or penalties.
ABLE account contributions are treated as "qualified retirement savings contributions" and the bill removes a temporary cutoff for certain retirement-saving items, extending tax-preferred treatment for some elective deferrals and voluntary retirement contributions beyond 2027.
Making these tax preferences permanent and preserving tax-favored 529-to-ABLE rollovers could modestly reduce federal revenue, potentially increasing pressure on other taxes or spending priorities.
Permanently allowing 529-to-ABLE rollovers may constrain some families' future flexibility to use 529 plan funds for education, because funds moved to ABLE are limited to disability-related expenses.
Unless paired with targeted outreach and assistance, lower-income and underserved people with disabilities may not fully benefit from expanded ABLE options due to lack of awareness or access.
Based on analysis of 3 sections of legislative text.
Permanently makes higher ABLE contribution limits and 529-to-ABLE rollovers available, and treats ABLE contributions as qualified retirement savings for certain tax benefits.
Introduced February 19, 2025 by Eric Stephen Schmitt · Last progress February 19, 2025
Makes several permanent changes to federal tax rules to help people with disabilities save more. It permanently keeps higher annual contribution limits for ABLE accounts, makes rollovers from 529 college savings plans to ABLE accounts permanent, and allows ABLE contributions to count as qualifying retirement-savings contributions for certain tax benefits. These changes take effect for taxable years ending after enactment and for rollovers/distributions made after enactment; they will require updates to IRS guidance and plan administrator procedures.