A 529 account can be rolled over to an ABLE account
The new tax law also allows tax-free rollovers from traditional 529 savings accounts to 529 ABLE accounts. ABLE accounts offer tax-free investment growth and tax-free withdrawals when the funds are used to pay for qualified disability expenses, including education, job training, healthcare and financial management. Contributions, including rollover contributions, are limited to $15,000 per year, and only the first $100,000 saved in the account is exempted from the $2,000 Supplemental Security Income (SSI) limit. Beneficiaries with account values greater than $100,000 will not receive SSI benefits, but will still receive Medicaid.
Another important change allows individuals who are working and earning income to contribute an additional amount to an ABLE account, up to the current poverty level, above the $15,000 limit. This is provided they do not participate in their employer’s retirement plan.
To qualify for an ABLE account, an individual must have been diagnosed with a significant disability before their 26th birthday, with a condition expected to last at least 12 consecutive months. The individual must also be receiving benefits under SSI and/or SSDI, or be able to obtain a disability certification from a doctor.
The final tax reform bill did not include:
Allowing 529 plans to be used for homeschooling expenses