Sponsors (17)
The bill increases tax-advantaged saving opportunities and flexibility for people with disabilities and expands short-term savers' credit eligibility for low- and moderate-income Americans, at the cost of some permanent federal revenue loss and added administrative/plan complexity — with some credit expansions only temporary through 2026/2027.
Low- and moderate-income taxpayers (including people with disabilities) can qualify for a larger savers' credit because ABLE account owner contributions and certain voluntary employee contributions/elective deferrals are counted toward the credit (through 2026), increasing tax incentives to save.
People with disabilities can permanently contribute higher amounts to ABLE accounts, allowing larger tax-advantaged savings for disability-related expenses.
People with disabilities and their families can permanently roll unused 529 plan funds into ABLE accounts after enactment, providing an ongoing tax-advantaged option to shift education savings toward disability-related costs.
Making higher ABLE contribution limits and permanent 529→ABLE rollovers permanent will reduce federal tax revenue over time, imposing a fiscal cost that is borne broadly by taxpayers or may reduce funding for other programs.
Repealing part of SECURE 2.0 and treating it retroactively as never enacted risks administrative complexity and compliance burdens for employers, plan administrators, and taxpayers who relied on the prior rule.
The temporary extension of expanded categories for the savers' credit only through 2026/2027 creates uncertainty for savers and complicates longer-term tax and retirement planning.
Based on analysis of 3 sections of legislative text.
Introduced February 19, 2025 by Eric Stephen Schmitt · Last progress February 19, 2025
Permanently removes scheduled expiration dates for several tax rules that help people with disabilities save. It makes the higher contribution limit for ABLE accounts permanent, treats contributions an eligible account owner makes to their own ABLE account as eligible for the savers’ credit, and permanently allows rollovers from 529 college savings plans to ABLE accounts. The tax changes take effect for taxable years ending after enactment and rollovers apply to distributions after enactment.