N-2018-62: Guidance on the Contribution Limits Applicable to ABLE Accounts

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IRS GuideWire August 3, 2018

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Issue Number:    N-2018-62

Inside This Issue

Notice 2018-62 announces that the Treasury Department and the IRS intend to issue proposed regulations providing clarification regarding the new rules increasing the contribution limits to ABLE accounts from certain designated beneficiaries.  In addition to the annual gift tax exclusion, a designated beneficiary who works may also contribute up to the lesser of these amounts: (1) the designated beneficiary’s compensation for the tax year, or (2) the poverty line for a one-person household in the state in which the designated beneficiary lives.  An employed designated beneficiary is not eligible for the increased contribution limit for the taxable year if any contribution is made on behalf of the employee to a 401(a) defined contribution plan or 403(a) annuity contract, a 403(b) annuity contract, or a 457(b) eligible deferred compensation plan.

Notice 2018-62 will be in IRB: 2018-34, dated 08/20/2018.

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