I 

111TH CONGRESS 

1ST SESSION H. R. 1205 

To amend the Internal Revenue Code of 1986 to provide for the establishment 

of ABLE accounts for the care of family members with disabilities, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 26, 2009 

Mr. CRENSHAW (for himself, Mr. MEEK of Florida, Mrs. MCMORRIS RODGERS, and Mr. KENNEDY) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the 

Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for the establishment of ABLE accounts for the care 

of family members with disabilities, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Achieving a Better 

5 Life Experience Act of 2009’’ or the ‘‘ABLE Act of 

6 2009’’. 


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1 SEC. 2. PURPOSES. 

2 The purposes of this Act are as follows: 

3 (1) To encourage and assist individuals and 

4 families in saving private funds for the purpose of 

5 supporting individuals with disabilities to maintain 

6 health, independence, and quality of life. 

7 (2) To provide secure funding for disability-re8 lated expenses on behalf of designated beneficiaries 

9 with disabilities that will supplement, but not sup10 plant, benefits provided through private insurance, 

11 the Medicaid program under title XIX of the Social 

12 Security Act, the supplemental security income pro13 gram under title XVI of such Act, the beneficiary’s 

14 employment, and other sources. 

15 SEC. 3. ABLE ACCOUNTS. 

16 (a) ESTABLISHMENT.— 

17 (1) IN GENERAL.—Subchapter F of chapter 1 

18 of the Internal Revenue Code of 1986 (relating to 

19 exempt organizations) is amended by inserting after 

20 part VIII the following new part: 

21 ‘‘PART IX—SAVINGS FOR INDIVIDUALS WITH 

22 DISABILITIES 

‘‘Sec. 530A. ABLE Accounts. 

23 ‘‘SEC. 530A. ABLE ACCOUNTS. 

24 ‘‘(a) GENERAL RULE.—An ABLE account shall be 

25 exempt from taxation under this subtitle. Notwithstanding 


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1 the preceding sentence, such account shall be subject to 

2 the taxes imposed by section 511 (relating to imposition 

3 of tax on unrelated business income of charitable organiza4 tions). 

5 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur6 poses of this section— 

7 ‘‘(1) ABLE ACCOUNTS.—The term ‘ABLE ac8 count’ means a trust created or organized in the 

9 United States (and designated as an ABLE account 

10 at the time created or organized) exclusively for the 

11 purpose of paying qualified disability expenses of an 

12 individual who is an individual with a disability and 

13 who is the designated beneficiary of the trust, but 

14 only if the written governing instrument creating the 

15 trust meets the following requirements: 

16 ‘‘(A) No contribution will be accepted— 

17 ‘‘(i) except in the case of rollover con18 tributions described in subsection (c)(4) 

19 and sections 223(c)(5)(A)(ii), 

20 408(d)(3)(A)(iii), 529(c)(3)(E), and 

21 530(d)(9), unless it is in cash, 

22 ‘‘(ii) if such contribution would result 

23 in aggregate contributions for the taxable 

24 year and all preceding taxable years ex25 ceeding $500,000, and 


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1 ‘‘(iii) after the date on which the ac2 count holder attains the age of 65. 

3 ‘‘(B) The trustee is— 

4 ‘‘(i) a bank (as defined in section 

5 408(n)), 

6 ‘‘(ii) the designated beneficiary, 

7 ‘‘(iii) a parent or guardian of the des8 ignated beneficiary, or 

9 ‘‘(iv) a third-party appointed by the 

10 designated beneficiary or a parent or 

11 guardian of the designated beneficiary (in12 cluding a family member of the designated 

13 beneficiary or an organization that admin14 isters pooled and special needs trusts) who 

15 demonstrates to the satisfaction of the Sec16 retary that the manner in which that per17 son will administer the trust will be con18 sistent with the requirements of this sec19 tion. 

20 ‘‘(C) No part of the trust assets will be in21 vested in life insurance contracts. 

22 ‘‘(D) The assets of the trust shall not be 

23 commingled with other property except in a 

24 common trust fund or common investment 

25 fund. 


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1 ‘‘(E) Except as provided in paragraph (4) 

2 or (5) of subsection (c), in the case that the 

3 designated beneficiary dies or ceases to be an 

4 individual with a disability, all amounts remain5 ing in the trust not in excess of the amount 

6 equal to the total medical assistance paid for 

7 the designated beneficiary after the establish8 ment of the trust under any State Medicaid 

9 plan established under title XIX of the Social 

10 Security Act shall be distributed to such State. 

11 ‘‘(2) QUALIFIED DISABILITY EXPENSES.— 

12 ‘‘(A) IN GENERAL.—The term ‘qualified 

13 disability expenses’ means any expenses 

14 which— 

15 ‘‘(i) are made for the benefit of an in16 dividual with a disability who is a des17 ignated beneficiary of the trust, and 

18 ‘‘(ii) approved under regulations es19 tablished by the Secretary. 

20 ‘‘(B) EXPENSES INCLUDED.—The fol21 lowing expenses shall, to the extent provided 

22 under regulations established by the Secretary, 

23 be qualified disability expenses if made for the 

24 benefit of an individual with a disability who is 

25 a designated beneficiary of the trust: 


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1 ‘‘(i) EDUCATION.—Expenses for edu2 cation, including tuition for preschool thru 

3 post-secondary education, books, supplies, 

4 and educational materials related to such 

5 education, tutors, and special education 

6 services. 

7 ‘‘(ii) HOUSING.—Expenses for hous8 ing, including rent, mortgage payments, 

9 home improvements and modifications, 

10 maintenance and repairs, real property 

11 taxes, and utility charges. 

12 ‘‘(iii) TRANSPORTATION.—Expenses 

13 for transportation, including the use of 

14 mass transit, the purchase or modification 

15 of vehicles, and moving expenses. 

16 ‘‘(iv) EMPLOYMENT SUPPORT.—Ex17 penses related to obtaining and maintain18 ing employment, including job-related 

19 training, assistive technology, and personal 

20 assistance supports. 

21 ‘‘(v) HEALTH, PREVENTION, AND

22 WELLNESS.—Expenses for the health and 

23 wellness, including premiums for health in24 surance, medical, vision, and dental ex25 penses, habilitation and rehabilitation servVerDate Nov 24 2008 01:00 Feb 28, 2009 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1205.IH H1205

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1 ices, durable medical equipment, therapy, 

2 respite care, long term services and sup3 ports, and nutritional management. 

4 ‘‘(vi) LIFE NECESSITIES.—Expenses 

5 for life necessities, including clothing, ac6 tivities which are religious, cultural, or rec7 reational, supplies and equipment for per8 sonal care, community-based supports, 

9 communication services and devices, adapt10 ive equipment, assistive technology, per11 sonal assistance supports, financial man12 agement and administrative services, ex13 penses for oversight, monitoring, or advo14 cacy, funeral and burial expenses. 

15 ‘‘(vii) OTHER APPROVED EX16 PENSES.—Any other expenses which are 

17 approved by the Secretary under regula18 tions and consistent with the purposes of 

19 this section. 

20 ‘‘(viii) ASSISTIVE TECHNOLOGY AND

21 PERSONAL SUPPORT SERVICES.—Expenses 

22 for assistive technology and personal sup23 port with respect to any item described in 

24 clauses (i) through (vii). 


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1 ‘‘(3) INDIVIDUAL WITH A DISABILITY.—An in2 dividual is an individual with a disability if such in3 dividual— 

4 ‘‘(A) would be eligible to receive supple5 mental security income benefits due to blind6 ness or disability under title XVI of the Social 

7 Security Act, or disability benefits under Title 

8 II of the Social Security Act, notwithstanding— 

9 ‘‘(i) the income and assets tests and 

10 substantial gainful activity test required 

11 for eligibility for such benefits, and 

12 ‘‘(ii) whether a determination has 

13 been made that such individual is blind or 

14 disabled, or 

15 ‘‘(B) is eligible to receive or is deemed to 

16 be receiving supplemental security income bene17 fits due to blindness or disability under title 

18 XVI of the Social Security Act, or disability 

19 benefits under title II of the Social Security 

20 Act. 

21 ‘‘(4) RULES RELATING TO ESTATE AND GIFT

22 TAX.—Rules similar to the rules of paragraphs (2), 

23 (4), and (5) of section 529(c) shall apply for pur24 poses of this section. 


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1 ‘‘(5) ONLY 1 ACCOUNT PER QUALIFIED BENE2 FICIARY.—No individual may have more than 1 

3 ABLE account for an individual with a disability. 

4 ‘‘(c) TAX TREATMENT OF DISTRIBUTIONS.— 

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, any amount paid or distrib7 uted out of an ABLE account shall be included in 

8 gross income by the payee or distributee, as the case 

9 may be, for the taxable year in which received in the 

10 manner as provided in section 72. 

11 ‘‘(2) DISTRIBUTIONS FOR BENEFIT OF DES12 IGNATED BENEFICIARY.— 

13 ‘‘(A) IN GENERAL.—No amount shall be 

14 includible in gross income under paragraph (1) 

15 if the qualified disability expenses of the des16 ignated beneficiary during the taxable year are 

17 not less than the aggregate distributions during 

18 the taxable year. 

19 ‘‘(B) DISTRIBUTIONS IN EXCESS OF EX20 PENSES.—If such aggregate distributions ex21 ceed such expenses during the taxable year, the 

22 amount otherwise includible in gross income 

23 under paragraph (1) shall be reduced by the 

24 amount which bears the same ratio to the 

25 amount which would be includible in gross inVerDate Nov 24 2008 01:00 Feb 28, 2009 Jkt 079200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1205.IH H1205

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1 come under paragraph (1) (without regard to 

2 this subparagraph) as the qualified disability 

3 expenses bear to such aggregate distributions. 

4 ‘‘(C) DISALLOWANCE OF EXCLUDED

5 AMOUNTS AS DEDUCTION, CREDIT, OR EXCLU6 SION.—No deduction, credit, or exclusion shall 

7 be allowed to the taxpayer under any other sec8 tion of this chapter for any qualified disability 

9 expenses to the extent taken into account in de10 termining the amount of the exclusion under 

11 this paragraph. 

12 ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT

13 USED FOR BENEFIT OF DESIGNATED BENE14 FICIARY.— 

15 ‘‘(A) IN GENERAL.—The tax imposed by 

16 this chapter for any taxable year on any tax17 payer who receives a payment or distribution 

18 from an ABLE account shall be increased by 

19 10 percent of the amount thereof which is in20 cludible in gross income under paragraph (1). 

21 ‘‘(B) EXCEPTION.—Subparagraph (A) 

22 shall not apply if the payment or distribution is 

23 made to a beneficiary (or to the estate of the 

24 designated beneficiary) on or after the death of 

25 the designated beneficiary. 


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1 ‘‘(C) CONTRIBUTIONS RETURNED BEFORE

2 CERTAIN DATE.—Subparagraph (A) shall not 

3 apply to the distribution of any contribution 

4 made during a taxable year if— 

5 ‘‘(i) such distribution is made before 

6 the 60th day after the date on which the 

7 contribution was made, and 

8 ‘‘(ii) such distribution is accompanied 

9 by the amount of net income attributable 

10 to such excess contribution. 

11 Any net income described in clause (ii) shall be 

12 included in gross income for the taxable year in 

13 which such excess contribution was made. 

14 ‘‘(4) ROLLOVERS.—Paragraph (1) shall not 

15 apply to any amount paid or distributed from an 

16 ABLE account to the extent that the amount re17 ceived is paid, not later than the 60th day after the 

18 date of such payment or distribution, into— 

19 ‘‘(A) another ABLE account for the ben20 efit of— 

21 ‘‘(i) the same beneficiary, or 

22 ‘‘(ii) an individual who— 

23 ‘‘(I) is the spouse of such indi24 vidual with a disability, or bears a re25 lationship to such individual with a 


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1 disability which is described in section 

2 152(d)(2), and 

3 ‘‘(II) is also an individual with a 

4 disability, or 

5 ‘‘(B) any trust which is described in sub6 paragraph (A) or (C) of section 1917(d)(4) of 

7 the Social Security Act and which is for the 

8 benefit of an individual described in clause (i) 

9 or (ii) of subparagraph (A). 

10 The preceding sentence shall not apply to any pay11 ment or distribution if it applied to any prior pay12 ment or distribution during the 12-month period 

13 ending on the date of the payment or distribution. 

14 ‘‘(5) CHANGE IN BENEFICIARY.—Any change in 

15 the beneficiary of an ABLE account shall not be 

16 treated as a distribution for purposes of paragraph 

17 (1) if the new beneficiary is an individual described 

18 in paragraph (4)(A)(ii) as of the date of the change. 

19 ‘‘(d) TAX TREATMENT OF ACCOUNTS.—Rules similar 

20 to the rules of paragraphs (2) and (4) of section 408(e) 

21 shall apply to any ABLE account. 

22 ‘‘(e) COMMUNITY PROPERTY LAWS.—This section 

23 shall be applied without regard to any community property 

24 laws. 


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1 ‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 

2 section, a custodial account shall be treated as a trust if— 

3 ‘‘(1) the assets of such account are held by a 

4 bank (as defined in section 408(n)) or another per5 son who demonstrates, to the satisfaction of the Sec6 retary, that the manner in which he will administer 

7 the account will be consistent with the requirements 

8 of this section, and 

9 ‘‘(2) the custodial account would, except for the 

10 fact that it is not a trust, constitute an account de11 scribed in subsection (b)(1). 

12 For purposes of this title, in the case of a custodial ac13 count treated as a trust by reason of the preceding sen14 tence, the custodian of such account shall be treated as 

15 the trustee thereof. 

16 ‘‘(g) REPORTS.—The trustee of an ABLE account 

17 shall make such reports regarding such account to the 

18 Secretary and to the beneficiary of the account with re19 spect to contributions, distributions, and such other mat20 ters as the Secretary may require. The reports required 

21 by this subsection shall be filed at such time and in such 

22 manner and furnished to such individuals at such time and 

23 in such manner as may be required. 

24 ‘‘(h) INFLATION ADJUSTMENT.— 


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1 ‘‘(1) IN GENERAL.—In the case of any taxable 

2 year beginning after 2010, the $500,000 dollar 

3 amount under subsection (b)(1)(A)(i)(II) shall be in4 creased by an amount equal to— 

5 ‘‘(A) such dollar amount, multiplied by 

6 ‘‘(B) the cost of living adjustment deter7 mined under section 1(f)(3) for the calendar 

8 year in which the taxable year begins, deter9 mined by substituting ‘calendar year 2009’ for 

10 ‘calendar year 1992’ in subparagraph (B) 

11 thereof. 

12 ‘‘(2) ROUNDING.—If any amount as adjusted 

13 under paragraph (1) is not a multiple of $1,000, 

14 such amount shall be rounded to the next lowest 

15 multiple of $1,000. 

16 ‘‘(i) REGULATIONS.—The Secretary, in consultation 

17 with the Secretary of Health and Human Services, shall 

18 prescribe regulations to carry out the purposes of this sec19 tion, including regulations— 

20 ‘‘(1) to ensure that individuals do not have 

21 more than 1 ABLE account, and 

22 ‘‘(2) to prevent fraud and abuse with respect to 

23 amounts claimed as qualified disability expenses.’’. 

24 (2) CONFORMING AMENDMENTS.— 

25 (A) TAX ON EXCESS CONTRIBUTIONS.— 


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1 (i) IN GENERAL.—Subsection (a) of 

2 section 4973 of the Internal Revenue Code 

3 of 1986 is amended by striking ‘‘or’’ at the 

4 end of paragraph (4), by inserting ‘‘or’’ at 

5 the end of paragraph (5), and by inserting 

6 after paragraph (5) the following new 

7 paragraph: 

8 ‘‘(6) an ABLE account (within the meaning of 

9 section 530A),’’. 

10 (ii) EXCESS CONTRIBUTIONS.—Sec11 tion 4973 of such Code is amended by add12 ing at the end the following new sub13 section: 

14 ‘‘(h) EXCESS CONTRIBUTIONS TO ABLE AC15 COUNTS.—For purposes of this section, in the case of an 

16 ABLE account (within the meaning of section 530A), the 

17 term ‘excess contributions’ means the sum of— 

18 ‘‘(1) the amount by which the sum of the 

19 amount contributed for the taxable year to such ac20 counts plus such amounts contributed for all pre21 ceding taxable years exceeds the amount described in 

22 section 530A(b)(1)(A)(ii), and 

23 ‘‘(2) the amount determined under this section 

24 for the preceding taxable year, reduced by the disVerDate Nov 24 2008 01:00 Feb 28, 2009 Jkt 079200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\H1205.IH H1205

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1 tributions from such account which were includible 

2 in gross income under section 530A(c)(1). 

3 For purposes of this section, an amount which is distrib4 uted out of an ABLE account in a distribution to which 

5 section 530A(c)(3)(C) applies shall be treated as an 

6 amount not contributed.’’. 

7 (B) TAX ON PROHIBITED TRANS8 ACTIONS.— 

9 (i) IN GENERAL.—Paragraph (1) of 

10 section 4975(e) of such Code (defining 

11 plan) is amended by redesignating sub12 paragraph (G) as subparagraph (H), by 

13 striking ‘‘or’’ at the end of subparagraph 

14 (F), and by adding after subparagraph (F) 

15 the following: 

16 ‘‘(G) an ABLE account described in sec17 tion 530A, or’’. 

18 (ii) EXEMPTION.—Subsection (d) of 

19 section 4975 of such Code (relating to ex20 emptions) is amended by striking ‘‘or’’ at 

21 the end of paragraph (22), by striking the 

22 period at the end of paragraph (23) and 

23 inserting ‘‘; or’’, and by inserting after 

24 paragraph (23) the following: 


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1 ‘‘(24) in the case of an ABLE account, any 

2 transaction to provide housing or other services by 

3 a family member to or for the designated beneficiary 

4 of the trust to the extent that such transaction does 

5 not exceed the fair market value of the housing or 

6 service (as the case may be) provided.’’. 

7 (iii) SPECIAL RULE.—Subsection (c) 

8 of section 4975 of such Code (relating to 

9 tax on prohibited transactions) is amended 

10 by adding at the end the following new 

11 paragraph: 

12 ‘‘(7) SPECIAL RULE FOR ABLE ACCOUNTS.—An 

13 individual for whose benefit an ABLE account is es14 tablished and any contributor to such account shall 

15 be exempt from the tax imposed by this section with 

16 respect to any transaction concerning such account 

17 (which would otherwise be taxable under this sec18 tion) if section 530A(d) applies with respect to such 

19 transaction.’’. 

20 (C) ROLLOVERS FROM CERTAIN OTHER

21 TAX FAVORED ACCOUNTS.— 

22 (i) QUALIFIED TUITION PROGRAMS.— 

23 Paragraph (3) of section 529(c) of such 

24 Code is amended by adding at the end the 

25 following new subparagraph: 


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1 ‘‘(E) CONTRIBUTIONS TO ABLE AC2 COUNT.—Subparagraph (A) shall not apply to 

3 that portion of any distribution which, within 

4 60 days of such distribution, is contributed to 

5 an ABLE account for the benefit of the des6 ignated beneficiary.’’. 

7 (ii) EDUCATION SAVINGS AC8 COUNTS.—Subsection (d) of section 530 of 

9 such Code is amended by adding at the 

10 end the following new paragraph: 

11 ‘‘(10) CONTRIBUTIONS TO ABLE ACCOUNT.— 

12 Paragraph (1) shall not apply to any amount paid 

13 or distributed from a Coverdell education savings ac14 count to the extent that the amount received is paid, 

15 not later than the 60th day after the date of such 

16 payment or distribution, into an ABLE account for 

17 the benefit of the same beneficiary.’’. 

18 (iii) HEALTH SAVINGS ACCOUNTS.— 

19 Subparagraph (A) of section 223(f)(5) is 

20 amended— 

21 (I) by inserting ‘‘(i)’’ before ‘‘into 

22 a health savings account’’, and 

23 (II) by inserting ‘‘or (ii) into an 

24 ABLE account for the benefit of such 


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1 beneficiary’’ before ‘‘not later than the 

2 60th day’’. 

3 (iv) CERTAIN IRAS.—Subparagraph 

4 (A) of section 408(d)(3) is amended by 

5 striking ‘‘or’’ at the end of clause (i), by 

6 striking the period at the end of clause (ii) 

7 and inserting ‘‘; or’’, and by inserting after 

8 clause (ii) the following new clause: 

9 ‘‘(iii) the entire amount received (in10 cluding money and other property) is paid 

11 into an ABLE account for the benefit of 

12 the child or grandchild of such individual 

13 not later than the 60th day after the day 

14 on which the payment or distribution is re15 ceived.’’. 

16 (D) REPORTS.—Paragraph (2) of section 

17 6693(a) of such Code is amended by striking 

18 ‘‘and’’ at the end of subparagraph (D), by 

19 striking the period at the end of subparagraph 

20 (E) and inserting ‘‘and’’, and by inserting after 

21 subparagraph (E) the following new subpara22 graph: 

23 ‘‘(F) section 530A(g) (relating to ABLE 

24 accounts).’’. 


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1 (E) EXCLUSION FROM INCOME UNDER

2 SSI.—Subsection (b) of section 1612 of the So3 cial Security Act (42 U.S.C. 1382a) is amended 

4 by striking ‘‘or’’ at the end of paragraph (22), 

5 by striking the period at the end of paragraph 

6 (23) and inserting ‘‘; or’’, and by inserting after 

7 paragraph (23) the following: 

8 ‘‘(24) any contribution to an ABLE account.’’. 

9 (F) CLERICAL AMENDMENT.—The table of 

10 parts for subchapter F of chapter 1 of such 

11 Code is amended by inserting after the item re12 lating to part VIII the following new item: 

‘‘PART IX. SAVINGS FOR INDIVIDUALS WITH DISABILITIES’’. 

13 (b) ANNUAL REPORTS.— 

14 (1) IN GENERAL.—The Secretary of the Treas15 ury, in consultation with the Secretary of Health 

16 and Human Services, shall report annually to Con17 gress on the usage of ABLE accounts under section 

18 530A of the Internal Revenue Code of 1986. 

19 (2) CONTENTS OF REPORT.—Any report under 

20 paragraph (1) shall include— 

21 (A) the number of people with an ABLE 

22 accounts, 

23 (B) the total amount of contributions to 

24 such accounts, 


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1 (C) the total amount and nature of dis2 tributions from such accounts, 

3 (D) issues relating to the abuse of such ac4 counts, if any, and 

5 (E) the amounts repaid from such ac6 counts to State Medicaid programs established 

7 under title XIX of the Social Security Act. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 4. DEDUCTION FOR CONTRIBUTIONS TO ABLE AC12 COUNTS. 

13 (a) DEDUCTION.— 

14 (1) IN GENERAL.—Part VII of subchapter A of 

15 chapter 1 of the Internal Revenue Code of 1986 is 

16 amended by redesignating section 224 as section 

17 225 and inserting after section 223 the following 

18 new section: 

19 ‘‘SEC. 224. CONTRIBUTIONS TO ABLE ACCOUNTS. 

20 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of a 

21 qualified individual, there shall be allowed as a deduction 

22 an amount equal so much of the qualified disability sav23 ings contributions made during the taxable year as do not 

24 exceed $2,000. 

25 ‘‘(b) LIMITATIONS.— 


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1 ‘‘(1) LIMITATION BASED ON MODIFIED AD2 JUSTED GROSS INCOME.— 

3 ‘‘(A) IN GENERAL.—The amount which 

4 would (but for this paragraph) be taken into ac5 count under subsection (a) for the taxable year 

6 shall be reduced (but not below zero) by the 

7 amount determined under subparagraph (B). 

8 ‘‘(B) AMOUNT OF REDUCTION.—The 

9 amount determined under this subparagraph is 

10 the amount which bears the same ratio to the 

11 amount which would be so taken into account 

12 as— 

13 ‘‘(i) the excess of— 

14 ‘‘(I) the taxpayer’s modified ad15 justed gross income for the taxable 

16 year, over 

17 ‘‘(II) the applicable amount, 

18 bears to 

19 ‘‘(ii) the phaseout amount. 

20 ‘‘(C) APPLICABLE AMOUNT; PHASEOUT

21 AMOUNT.—For purposes of subparagraph (B), 

22 the applicable amount and the phaseout amount 

23 shall be determined as follows: 

‘‘The applicable 

amount is: 

The phaseout amount 

is: 

In the case of a joint return ................................... $60,000 $10,000


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‘‘The applicable 

amount is: 

The phaseout amount 

is: 

In the case of a head of household ......................... $45,000 $7,500

In any other case .................................................... $30,000 $5,000. 

1 ‘‘(D) MODIFIED ADJUSTED GROSS IN2 COME.—For purposes of this paragraph, the 

3 term ‘modified adjusted gross income’ means 

4 the adjusted gross income of the taxpayer for 

5 the taxable year increased by any amount ex6 cluded from gross income under section 911, 

7 931, or 933. 

8 ‘‘(E) INFLATION ADJUSTMENT.—In the 

9 case of any taxable year beginning in a calendar 

10 year after 2010, each of the applicable amounts 

11 in the second column of the table in subpara12 graph (C) shall be increased by an amount 

13 equal to— 

14 ‘‘(i) such dollar amount, multiplied by 

15 ‘‘(ii) the cost-of-living adjustment de16 termined under section 1(f)(3) for the cal17 endar year in which the taxable year be18 gins, determined by substituting ‘calendar 

19 year 2009’ for ‘calendar year 1992’ in sub20 paragraph (B) thereof. 


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1 Any increase determined under the preceding 

2 sentence shall be rounded to the nearest mul3 tiple of $500. 

4 ‘‘(2) EARNED INCOME LIMITATION.—The 

5 amount of any deduction allowed under subsection 

6 (a) with respect to any taxpayer shall not exceed the 

7 earned income (as defined by section 32(c)(2)) of 

8 such taxpayer for such taxable year. 

9 ‘‘(c) QUALIFIED INDIVIDUAL.—For purposes of this 

10 section, the term ‘qualified individual’ means an individual 

11 with a disability (as defined in section 530A(b)) who is 

12 the designated beneficiary of an ABLE accounts (as de13 fined by section 530A(a)). 

14 ‘‘(d) QUALIFIED DISABILITY SAVINGS CONTRIBU15 TIONS.—The term ‘qualified disability savings contribu16 tions’ means, with respect to any taxable year, the aggre17 gate contributions made by the taxpayer to the ABLE ac18 count for an individual with a disability (as so defined) 

19 with respect to which such taxpayer is the qualified indi20 vidual. 

21 ‘‘(e) TREATMENT OF CONTRIBUTIONS BY DEPEND22 ENT.—If a deduction under section 151 with respect to 

23 an individual is allowed to another taxpayer for a taxable 

24 year beginning in the calendar year in which such individ25 ual’s taxable year begins— 


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1 ‘‘(1) no deduction shall be allowed under sub2 section (a) to such individual for such individual’s 

3 taxable year, and 

4 ‘‘(2) any qualified disability savings contribu5 tions made by such individual during such taxable 

6 year shall be treated for purposes of this section as 

7 made by such other taxpayer.’’. 

8 (2) CONFORMING AMENDMENTS.—The table of 

9 sections for part VII of subchapter A of chapter 1 

10 of the Internal Revenue Code of 1986 is amended 

11 redesignating the item relating to section 224 as re12 lating to section 225 and by inserting after the item 

13 relating to section 223 the following new item: 

‘‘Sec. 224. Contributions to ABLE accounts.’’. 

14 (b) STUDY.— 

15 (1) IN GENERAL.—The Secretary of the Treas16 ury (or the Secretary’s delegate), in consultation 

17 with the Secretary of Health and Human Services, 

18 shall conduct a study on the use of ABLE accounts 

19 (as defined by section 530A(a) of the Internal Rev20 enue Code) and the effect of the deduction allowed 

21 under section 224 of such Code for contributions to 

22 such accounts. Such study shall consider the effect 

23 that a tax credit or a refundable matching tax credit 

24 would have on the use of and contributions to such 

25 accounts. 


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1 (2) REPORT.—Not later than 5 years after the 

2 date of the enactment of this Act, the Secretary of 

3 the Treasury shall report to Congress on the study 

4 conducted under paragraph (1). 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 the date of the enactment of this Act. 

8 SEC. 5. TREATMENT OF ABLE ACCOUNTS UNDER CERTAIN 

9 FEDERAL PROGRAMS. 

10 (a) TREATMENT AS A MEDICAID EXCEPTED

11 TRUST.—Paragraph (4) of section 1917(d) of the Social 

12 Security Act (42 U.S.C. 1396p(d)(4)) is amended by add13 ing at the end the following new subparagraph: 

14 ‘‘(D) A trust which is an ABLE account de15 scribed in section 530A(b)(1) of the Internal Rev16 enue Code of 1986.’’. 

17 (b) ACCOUNT FUNDS DISREGARDED FOR PURPOSES

18 OF CERTAIN OTHER MEANS-TESTED FEDERAL PRO19 GRAMS.—Notwithstanding any other provision of Federal 

20 law that requires consideration of 1 or more financial cir21 cumstances of an individual, for the purpose of deter22 mining eligibility to receive, or the amount of, any assist23 ance or benefit authorized by such provision to be provided 

24 to or for the benefit of such individual, any amount (in25 cluding earnings thereon) in any ABLE account of such 


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1 individual, and any distribution for qualified disability ex2 penses (as defined in section 530A(b)(2)) shall be dis3 regarded for such purpose with respect to any period dur4 ing which such individual maintains, makes contributions 

5 to, or receives distributions from such ABLE account. 

Æ 


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