‘‘(5) ONLY 1 ACCOUNT PER QUALIFIED BENE-
FICIARY.—No individual may have more than 1 
ABLE account for an individual with a disability. 
‘‘(c) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, any amount paid or distrib-
uted out of an ABLE account shall be included in 
gross income by the payee or distributee, as the case 
may be, for the taxable year in which received in the 
manner as provided in section 72. 
‘‘(2) DISTRIBUTIONS
FOR
BENEFIT
OF
DES-
IGNATED BENEFICIARY.— 
‘‘(A) IN GENERAL.—No amount shall be 
includible in gross income under paragraph (1) 
if the qualified disability expenses of the des-
ignated beneficiary during the taxable year are 
not less than the aggregate distributions during 
the taxable year. 
‘‘(B) DISTRIBUTIONS IN EXCESS OF EX-
PENSES.—If such aggregate distributions ex-
ceed such expenses during the taxable year, the 
amount otherwise includible in gross income 
under paragraph (1) shall be reduced by the 
amount which bears the same ratio to the 
amount which would be includible in gross in-
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come under paragraph (1) (without regard to 
this subparagraph) as the qualified disability 
expenses bear to such aggregate distributions. 
‘‘(C) 
DISALLOWANCE
OF
EXCLUDED 
AMOUNTS AS DEDUCTION, CREDIT, OR EXCLU-
SION.—No deduction, credit, or exclusion shall 
be allowed to the taxpayer under any other sec-
tion of this chapter for any qualified disability 
expenses to the extent taken into account in de-
termining the amount of the exclusion under 
this paragraph. 
‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT 
USED
FOR
BENEFIT
OF
DESIGNATED
BENE-
FICIARY.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter for any taxable year on any tax-
payer who receives a payment or distribution 
from an ABLE account shall be increased by 
10 percent of the amount thereof which is in-
cludible in gross income under paragraph (1). 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply if the payment or distribution is 
made to a beneficiary (or to the estate of the 
designated beneficiary) on or after the death of 
the designated beneficiary. 
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‘‘(C) CONTRIBUTIONS RETURNED BEFORE 
CERTAIN
DATE.—Subparagraph (A) shall not 
apply to the distribution of any contribution 
made during a taxable year if— 
‘‘(i) such distribution is made before 
the 60th day after the date on which the 
contribution was made, and 
‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in gross income for the taxable year in 
which such excess contribution was made. 
‘‘(4) ROLLOVERS.—Paragraph (1) shall not 
apply to any amount paid or distributed from an 
ABLE account to the extent that the amount re-
ceived is paid, not later than the 60th day after the 
date of such payment or distribution, into— 
‘‘(A) another ABLE account for the ben-
efit of— 
‘‘(i) the same beneficiary, or 
‘‘(ii) an individual who— 
‘‘(I) is the spouse of such indi-
vidual with a disability, or bears a re-
lationship to such individual with a 
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disability which is described in section 
152(d)(2), and 
‘‘(II) is also an individual with a 
disability, or 
‘‘(B) any trust which is described in sub-
paragraph (A) or (C) of section 1917(d)(4) of 
the Social Security Act and which is for the 
benefit of an individual described in clause (i) 
or (ii) of subparagraph (A). 
The preceding sentence shall not apply to any pay-
ment or distribution if it applied to any prior pay-
ment or distribution during the 12-month period 
ending on the date of the payment or distribution. 
‘‘(5) CHANGE IN BENEFICIARY.—Any change in 
the beneficiary of an ABLE account shall not be 
treated as a distribution for purposes of paragraph 
(1) if the new beneficiary is an individual described 
in paragraph (4)(A)(ii) as of the date of the change. 
‘‘(d) TAX TREATMENT OF ACCOUNTS.—Rules similar 
to the rules of paragraphs (2) and (4) of section 408(e) 
shall apply to any ABLE account. 
‘‘(e) COMMUNITY PROPERTY LAWS.—This section 
shall be applied without regard to any community property 
laws. 
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‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 
section, a custodial account shall be treated as a trust if— 
‘‘(1) the assets of such account are held by a 
bank (as defined in section 408(n)) or another per-
son who demonstrates, to the satisfaction of the Sec-
retary, that the manner in which he will administer 
the account will be consistent with the requirements 
of this section, and 
‘‘(2) the custodial account would, except for the 
fact that it is not a trust, constitute an account de-
scribed in subsection (b)(1). 
For purposes of this title, in the case of a custodial ac-
count treated as a trust by reason of the preceding sen-
tence, the custodian of such account shall be treated as 
the trustee thereof. 
‘‘(g) REPORTS.—The trustee of an ABLE account 
shall make such reports regarding such account to the 
Secretary and to the beneficiary of the account with re-
spect to contributions, distributions, and such other mat-
ters as the Secretary may require. The reports required 
by this subsection shall be filed at such time and in such 
manner and furnished to such individuals at such time and 
in such manner as may be required. 
‘‘(h) INFLATION ADJUSTMENT.— 
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