1. The ABLE Act: From Federal Regulations to your State Legislature
John M. Ariale
Attorney and Senior Government Relations Consultant
Washington, D.C

2. Legislative History
First introduced in 2007 – Called the Financial Security Accounts for Individuals with Disabilities Act
Re-introduced in each Congress
HR 647 – passed on 12/3/14 (404-17)
S 313 – passed on 12/16/14 (76-16)
Signed into law – 12/19/14

3. ABLE at a Glance
Not a silver bullet for families with disabled children, nor will it come close to assisting those families in saving for all the costs associated with raising a child with special needs.
The ABLE Act does give families another weapon for battling the challenges they face.

4. ABLE at a Glance Disability was established before age 26,
Individuals living in a state that has authorized ABLE Act accounts can participate,
Only one ABLE Act account per individual,
Total annual contributions cannot exceed $14,000,
Upon the death of an ABLE Act participant, every dollar remaining in the account must be paid to the state Medicaid
If the ABLE Act account exceeds $100,000, the participant’s ability to receive Supplemental Security Income (SSI) will be temporarily suspended.

5. Comparing ABLE to SNT Issues ABLE Account Third Party SNT
Main Difference
Who can use?
Only persons disabled before age 26
Any person with a disability
ABLE is limited and SNT can be used by anyone
Who can fund?
Anyone, including person with disability
Anyone, except person with a disability (must use first party SNT)
ABLE can be funded by person with a disability's own assets unlike the SNT

6. Comparing ABLE to SNT Issues ABLE Account Third Party SNT
Main Difference
How many can person have?
One
Unlimited
Person can only have one ABLE account but unlimited SNTs
Who can control?
Person with a disability and likely his or her legal guardian, conservator, or agent
Anyone except the person with a disability and his or her spouse
ABLE allows person with a disability to retain control while SNT requires someone else to be in charge

7. Comparing ABLE to SNT Issues ABLE Account Third Party SNT
Main Difference
How much can fund in a year?
$14,000 (or annual gift exemption)
Unlimited
ABLE limit in how much can be funded and SNT allows unlimited funding.
Is funding gift-tax free?
Yes No
ABLE can be funded gift-tax free; an SNT is subject to gift tax (if funded during lifetime)

8. Comparing ABLE to SNT Issues ABLE Account Third Party SNT
Main Difference
Is there a cap on how much can be in account?
Yes, currently $100,000 limitation for SSI recipients and up to state 529-plan limitations No
ABLE cannot be used for assets over $100,000 while SNT can be used for any amount
How is income taxed?
No income tax
Taxed as a non-granter trust except to the extent funds are used on behalf of the beneficiary
SNT will be taxed on income earned while ABLE account will not 

9. Comparing ABLE to SNT Issues ABLE Account Third Party SNT
Main Difference
What type of distributions can be made?
Only "qualified disability expenses" as defined by government
No limitation, except for certain disbursements may reduce or eliminate SSI or Medicaid eligibility
ABLE has much stricter limitations on how it can be used than SNT

10. Regulatory Updates

11. Key Regulation Developments
On March 10, 2015 the Internal Revenue Service (IRS) announced Notice to provide advance notification of a provision it expects to be included in the proposed regulations for section 529A of the Internal Revenue Code regarding ABLE Act accounts
On June 19, 2015, the IRS released the highly anticipated Notice of Proposed Rule Making (NPRM) for the Achieving a Better Life Experience (ABLE) Act
Public comment until September 21, 2015
Public hearing October 14, 2015

12. Signature Authority Regulation:
The designated beneficiary, who is the qualified individual with a disability, is also the account owner
If the designated beneficiary is not able to exercise signature authority, designated beneficiary’s agent, or a parent or legal guardian can be allowed signature authority over the account
Comments:
Good rule in general
Should add extension of rule to designee of parent

13. Establishing An ABLE Program
Regulation:
The proposed regulations states that “a program is established by a State, or its agency or instrumentality, if the program is initiated by State statute or regulation, or by an act of a State official or agency with the authority to act on behalf of the State.”
Comment:
ABLE Act only allows a state to establish its own ABLE program – it does not obligate a state to do so
Suggests that an ABLE program can be established by a state outside the usual vehicle of some enacted piece of legislation - highly unlikely

14. Criteria for Establishing Eligibility
Regulation:
Reaffirms Definition of Statute
26th Birthday
Each state can verify as they determine
Comments:
Age limitation was added late in the legislative process by the W&M staff

15. Disability Determination
Regulation
standard of disability in the Social Security Act for children claiming benefits under the Supplemental Security Income for the Aged, Blind, and Disabled (SSI) program based on disability
Certification leaves the responsibility of determining eligibility to administrators
Comments
May establish an unreasonable obligation to program administrators unfamiliar with this type of determination
Standardize the documentation necessary for eligibility
Consistency in proof of eligibility would minimize confusion in the disability community

16. Recertification/Change in Status
Regulation
There may be circumstances in which the designated beneficiary changes his or her status
Permits account continuation if eligible when account opened
No contributions can be made
Comments
Uniform disability certification
Longer term waiver for unlikely change in disability
Those receiving SS benefits, should be exempt from recertification

17. Residency Requirements
Regulation
May be established only under the qualified ABLE program of the State in which that designated beneficiary is a resident
If State does not establish and maintain a qualified ABLE program, it may contract with another State
If move, may maintain ABLE account
Comment
Strongly support this proposed regulation
Intent was not to have residency requirement
Concern over Medicaid Payback regulations/confusion

18. Rollovers
Regulation
funds from a 529 college saving account will not be allowed to be rolled over to a 529A account (ABLE account) without applicable penalties and tax implications
Comment
IRS rationalizes this ecause such a distribution to the ABLE account would not constitute a qualified higher education expense
Contrary to ALL legislative intent
Will be fixed legislatively

19. Qualified Expenses Regulation Comment
List of permitted allowable expenses are not exhaustive and should additionally include basic living expenses
Disability related expenses should be construed broadly, may be attributed to the designated beneficiary’s health, independence and quality of life, should not be limited to items for which there is a medical necessity, and may include expenses which could benefit individuals in addition to benefiting the designated beneficiary
Comment
Strongly support interpretation
Beneficiary should be solely responsible for record keeping

20. Community Development Financial Institutions (CDFI’s)
Regulation
Qualified ABLE program or any of its contractors may contract with one or more Community Development Financial Institutions (CDFIs)
Comment
Rule suggesting CDFI’s may lead some policymakers to look no further than establishing CDFI’s as their ABLE account administrators
Should clarify that other entities could play similar role

21. State Implementation

22. Typical State Enactment
As states consider legislative models, they have many different approaches to consider. However, the minimum requirements that all bills include are:
Authorization of 529A ABLE program
Consistent with federal law, including definitions
Designation of state agency
Exemption of state means-tested programs
Exemption of ABLE accounts from state taxes
Authority to contract with other state programs

23. Florida’s ABLE Act
The Florida legislation includes several key components:
Governing Board
Consistent with key federal requirements
Purpose
Eligibility
Disability expenses

24. Florida’s ABLE Act - Timeframe
Effective July 1, 2015
For 2015, contributions capped at $14,000
Only the first $100,000 disregarded for SSI eligibility; continued eligibility for Medicaid and other means-tested programs
$3,386,000 allocated for start-up for fiscal year

25. Florida’s ABLE Act – Framework
Florida ABLE (not-for-profit direct support organization) to be established by the Florida Prepaid College Board
Oversight by Prepaid College Board
Will maintain a Florida ABLE website
Moneys and property held in trust by Florida ABLE

26. Florida’s ABLE Act – The Board
Chair of Florida Prepaid
An advocate for persons with disabilities appointed by the President of the Senate
An advocate for persons with disabilities appointed by the Speaker of the House
A person with expertise in accounting, risk management, or investment management appointed by the Prepaid Board (may be member)
A person with expertise in accounting, risk management, or investment management appointed by the Governor

27. Florida’s ABLE Act – Participation Agreements
Maximum annual contribution of $14,000 per year
Amendments to increase or decrease participation, change beneficiaries or other authorized purposes
Contracting
May contract with another state if Florida ABLE is not qualified
May contract with another state to provide their services if they do not have an ABLE program

28. Florida’s ABLE Act – Other Provisions
An estimated 4,000 of Florida’s 400,000 population may participate during
Formal operation as early as April 1, 2016, but no later than July 1, 2016
Status report required to the Governor by November 1, 2015
Rule making authority granted

29. Status of ABLE Act Implementation
31 states have passed some version of ABLE enacting legislation in their state
2 states have legislation awaiting signature (California and New York) by the governor

30. ABLE Considered - Not Enacted
9 states and the District of Columbia have considered some version of an ABLE enactment bill; however, they have not yet passed the legislation:
Alaska
District of Columbia
Kentucky
Maine
Michigan
New Hampshire
New Jersey
New Mexico
Pennsylvania
South Carolina

31. ABLE Implementation - Acts Not Considered
The following eight (8) states did not consider any version of the ABLE Act during the current legislative session:
Arizona
Georgia
Idaho
Indiana
Mississippi
Oklahoma
South Dakota
Wyoming

32. Conclusion
Lasting legacy of the ABLE Act is awareness of the fact that due to antiquated laws in this country, people with disabilities are forced to live in deep poverty and there is no choice for too many of these individuals but to remain impoverished
We should continue to build upon the momentum and good work of the ABLE Act by removing restrictions that leave people with disabilities trapped in poverty

33. Questions/Comments/Discussion
John Ariale