34 Tex. Admin. Code § 7.182 - Tax Exempt Status Requirements

The provisions of this section are intended to meet the requirements of Internal Revenue Code, §529A.

(1) The Board, to the extent allowed by law, may contract with another state, including a state or multi-state consortium, that administers a qualified ABLE program as authorized by Internal Revenue Code, §529A to act as plan manager, provide certain services under a contractual arrangement or provide residents of this state with access to a qualified ABLE program.

(2) A contribution to an ABLE account must be made in cash or cash equivalent.

(3) The Board will monitor contributions to an ABLE account so that total contributions to an ABLE account for a designated beneficiary do not result in an excess contribution as defined in these rules.

(4) The Board will monitor the balance of an ABLE account so that an excess contribution as defined in these rules will not be accepted.

(5) The Board shall provide separate accounting for each designated beneficiary.

(6) A designated beneficiary is limited to one ABLE account, and each ABLE account may have only one owner, who will be the designated beneficiary. Unless the participant is also the designated beneficiary, the participant may not have and will not acquire a beneficial interest in the ABLE account, and the participant will administer the account for the benefit of the designated beneficiary.

(7) A designated beneficiary must be a Texas resident at the time of establishing and maintaining an active account in the Texas ABLE Program. The Board may act to accept out-of-state residents into the Program to the extent allowed by law.

(8) A designated beneficiary may, directly or indirectly, direct the investment of any contributions to an ABLE account, only to the extent allowed by Internal Revenue Code, §529A.

(9) The Board shall determine the earnings portion of each distribution, if any, in accordance with methods that are consistent with Internal Revenue Code, §529A; any earnings on contributions included in distributions for qualified disability expenses shall not be includible in gross income to the extent provided by Internal Revenue Code, §529A.

(10) The Board shall report distributions of the designated beneficiary to the Secretary of the United States Treasury, as required by Internal Revenue Code, §529A.

(11) The participant, designated beneficiary, and any other contributor, may not use any interest in or portion of an ABLE account as security for a loan. This paragraph does not prohibit the use of funds in an ABLE account as down payment for a home or vehicle to the extent it is a qualified disability expense.

(12) Available funds may be rolled over to the extent allowed by Internal Revenue Code, §529A and United States Treasury regulations as described in § 7.189 of this title (relating to Rollovers).

(13) A change in the designated beneficiary of an ABLE account during a taxable year shall not be treated as a taxable distribution on Internal Revenue Service Form 1099QA for that taxable year for purposes of paragraph (9) of this section if the new beneficiary is an eligible member of the family.

(14) Except as provided by the Secretary of the United States Treasury, and for the purpose of applying Internal Revenue Code, §72, all distributions during a taxable year shall be treated as one distribution and the value of the account shall be computed and reported on Internal Revenue Service Form 1099QA as of the close of the calendar year in which the taxable year begins.

(15) The Board shall submit notices, statements, and reports as required to maintain compliance with Internal Revenue Code, §529A and any other state and federal requirements.

(16) The Board will make any transfers to state in compliance with Internal Revenue Code, §529A.

Notes

34 Tex. Admin. Code § 7.182

Adopted by Texas Register, Volume 41, Number 37, September 9, 2016, TexReg 7111, eff. 9/12/2016; Amended by Texas Register, Volume 48, Number 24, June 16, 2023, TexReg 3300, eff. 6/22/2023