The IRS's Proposed ABLE Regulations: Obstacles To Launching State Programs, And Potential Solutions

The IRS's recently-published proposed regulations for Section 529A qualified ABLE programs have taken some wind out of the sails of state program administrators and potential program managers who had hoped for regulations that hewed closer to the requirements in effect for qualified tuition programs under Section 529, on which Section 529A was based.  Some state officials and would-be program managers are evaluating whether cost-effective ABLE programs can be launched given what, at first blush, appear to be substantially greater administrative burdens imposed on state programs by the proposed ABLE regulations.

The hesitation provoked by the proposed regulations is understandable when one compares the IRS's proposed administrative requirements to those applicable to Section 529 programs. Section 529 programs are not required to check whether an account owner is eligible to open an account, are not required to check on an annual basis whether the account owner's status