New legislation was introduced late yesterday in Congress to enhance Achieving a Better Life Experience (ABLE) accounts. Nineteen states currently offer ABLE accounts, which allow individuals to save for short- and long-term disability-related expenses on a tax-favored basis. The new legislation – ABLE 2.0 – includes three separate bills:
· ABLE to Work Act would provide additional incentives for savings for ABLE account holders who work. This bill would qualify ABLE accounts for the saver’s credit, which allows a dollar-for-dollar reduction in tax liability for lower-income individuals.
· ABLE Financial Planning Act would allow a direct rollover from a college savings account to an ABLE account, making it easier for families whose child receives a diagnosis to reinvest the proceeds of an already-established college savings account.
· ABLE Age Adjustment Act would make individuals who become disabled before age 46 eligible for an ABLE account. Under current law, only those disabled before their 26th birthday are eligible for an ABLE account.
ABLE 2.0 is sponsored in the House of Representatives by Representatives Cathy McMorris Rodgers (R-WA), Pete Sessions (R-TX), Chris Smith (R-NJ), Tony Cárdenas (D-CA), and Jim Langevin (D-RI). The Senate bills are sponsored by Senators Richard Burr (R-NC), Bob Casey (D-PA), and Chris Van Hollen (D-MD).