Will ABLE Accounts Arrive in VT in 2017? Posted by Association of Vermont Credit Unions on 12:21 PM

Recently, an AVCU-member credit union asked about the availability of (529A) ABLE accounts for Vermonters. ABLE stands for "Achieving a Better Life Experience."  State-level ABLE programs are intended to ease financial burdens of disabled individuals through tax-free savings accounts available to cover qualified expenses such as education, housing, and transportation.  Contributions are in federal after-tax dollars by family and friends. Earnings grow tax-free just like with 529 college savings accounts (Roth style). Created by an act of Congress, ABLE accounts are administered by the States. Unfortunately at this point, only 4 states have created ABLE account programs (OH, TN, NE and FL).  Vermont does not yet have an ABLE account program.

Each state needs to decide whether to:

• run its own ABLE program
• select another entity, such as a financial services firm, to run the program
• or to contract with another state to partner in the operation of the ABLE program.

Complicating the start of ABLE programs by States is that, as of August of this year, the IRS and Social Security Administration hadn't yet finalized regulations and guidance surrounding the treatment of ABLE accounts for tax and other government related purposes.

The Vermont Legislature enacted statutory language authorizing ABLE accounts in the 2015 legislative session. Vermont's State Treasurer created an ABLE Task Force, in which AVCU participates, to study the program and weigh alternative approaches for Vermont. The Treasuer intends to make recommendations to the Vermont Legislature when it convenes in January. Based on analysis of the Vermont market, the potential for ABLE account recipients in Vermont is substantially limited, likely making it impractical for Vermont to administer its own program.  Partnership with one or more like-minded states seems more feasible at this point.

If you haven’t seen it already, there’s a good deal of Vermont specific information on the Treasurer’s website at http://www.vermonttreasurer.gov/reports/ABLE-task-force, including copies of the Task Force meeting notes, timeline, etc.

When administrative arrangements for ABLE accounts in Vermont are finalized by state government, either AVCU or the State will provide educational information for participating financial institutions.  Most likely, that will be sometime in 2017.