Important information regarding tax reform
Federal tax reform legislation includes new provisions for ABLE programs
On December 22, 2017, federal tax reform legislation, H.R. 1 of the 115th Congress (the Tax Cuts and Jobs Act of 2017), was signed into law. This legislation includes the following new provisions for ABLE programs:
- ABLE account owners who earn income may contribute more to their accounts than the program's annual $15,000 limit. The additional annual contribution is equal to the federal poverty line for a one-person household ($12,060 for the 2018 tax year) or the account owner's income, whichever is less.
- ABLE account owners who contribute to their accounts may receive a federal tax credit, called a Saver's Credit, for up to $2,000 to help save for retirement. Eligibility is based primarily on Adjusted Gross Income and other eligibility criteria detailed here.
- 529 College Savings Program account owners are eligible to roll over 529 Plan assets to an ABLE account owned by a beneficiary or a member of that beneficiary’s family* with no federal tax impact.** These rollovers are subject to the annual contribution limit for ABLE accounts.
While the NY ABLE program is implementing these changes, you may contact us at 1.855.5NY.ABLE (1.855.569.2253) Monday through Friday from 8 a.m.– 8 p.m. for additional information and assistance.
* “Member of the family” is defined in Internal Revenue Code §529 and includes the original beneficiary's children, siblings, parents, cousins, nieces, nephews, aunts, uncles, grandparents, spouse, and children.
** The New York State Department of Taxation and Finance issued a Preliminary Report on the Federal Tax Cuts and Jobs Act stating it is possible that any rollover from a 529 College Savings Program account to an ABLE program account would not be a taxable event for purposes of New York State taxes, since New York law currently allows a qualified withdrawal from a New York 529 Plan account for the death or disability of a beneficiary without recapture of contribution deductions. We are continuing to evaluate this new federal law and its tax impact in New York and encourage NY 529 and NY ABLE account owners to consult a qualified tax advisor about their personal situation.