Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS › Chapter 7 - PREPAID HIGHER EDUCATION TUITION PROGRAM › Subchapter N - ACHIEVING A BETTER LIFE EXPERIENCE (ABLE) PROGRAM › Section 7.182 - Tax Exempt Status Requirements

Current through Reg. 49, No. 28; July 12, 2024
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.