(a) Prop Reg § 1.529A-2(h)(1) provides that a qualified ABLE program must establish safeguards to allow the ABLE program to distinguish between distributions used to pay for qualified disability expenses and other distributions, and to permit the identification of amounts distributed for housing expenses, as defined for purposes of the Supplemental Security Income program of the Social Security Administration. (b) Prop Reg § 1.529A-6(d) requires a qualified ABLE program to request the TIN (i.e., the Social Security number, for most people) for each contributor to the ABLE account at the time a contribution is made if the program doesn’t already have a record of that person’s correct TIN. (c) Prop Reg § 1.529A-2(e) defines the disability certification that may be filed with the Secretary of the Treasury as including the required certifications and a copy of the signed diagnosis, and also provides for certain conditions to be deemed to meet the requirements of filing a disability certification.New guidance. In order to facilitate the establishment of qualified ABLE programs by the states, IRS issued interim guidance in Notice 2015-81 on the three requirements noted above. (1) Categorization of distributions not required. Notice 2015-81 provides that ABLE programs need not include safeguards to determine which distributions are for qualified disability expenses, nor are they required to specifically identify those used for housing expenses. Commentators had noted that such a requirement would be unduly burdensome and that the eventual use of a distribution may not be known at the time it is made. And, the identification of housing expenses was relevant only for purposes of determining eligibility for certain Social Security benefits and has no relevance for federal income tax purposes. Notice 2015-81 provides, however, that designated beneficiaries will still need to categorize distributions to determine their federal income tax obligations. (2) Contributors’ TINs not required. Notice 2015-81 provides that ABLE programs will not be required to request the TINs of contributors to the ABLE account at the time when the contributions are made, if the program has a system in place to reject contributions that exceed the annual contribution limits. However, if an excess contribution is deposited into a designated beneficiary’s ABLE account, the program will need to request the contributor’s TIN. Commentators had noted that such a requirement would be burdensome because it’s likely that contributions will come from multiple sources and will be made in a variety of ways (payroll deduction, check, debit, automated clearing house (ACH) transfers, or others), making it difficult as a practical matter to obtain the TIN of the contributor. Commentators had stated that some contributors, especially those making small gifts, may be reluctant to make a contribution if a TIN were required to be provided. (3) Disability diagnosis certification permitted. Notice 2015-81 provides that a certification under penalties of perjury that the individual (or the individual’s agent under a power of attorney or a parent or legal guardian of the individual) has the signed physician’s diagnosis, and that the signed diagnosis will be retained and provided to the ABLE program or IRS upon request, is adequate to satisfy IRS with regard to the Code Sec. 529A(e)(1)(B)’s and Code Sec. 529A(e)(2)(A) ‘s certification requirements. A designated beneficiary can open an ABLE account by certifying, under penalties of perjury, that they meet the qualification standards, including their receipt of a signed physician’s diagnosis if necessary, and that they will retain that diagnosis and provide it to the program or IRS upon request. Eligible individuals with disabilities will not need to provide the written diagnosis when opening the ABLE account, and ABLE programs will not need to receive, retain, or evaluate detailed medical records. States and potential qualified ABLE program administrators had expressed concerns about their responsibilities and potential liabilities for receiving and safeguarding medical information contained in a signed diagnosis. Commentators had been concerned that qualified ABLE programs would incur unmanageable costs and burdens in trying to comply with applicable laws imposing system and other requirements on those in possession of medical records, as well as in implementing systems to receive and store paper documentation. In Notice 2015-81 , IRS noted that if a certification used to open a qualified ABLE account before the issuance of final regs is consistent with Notice 2015-81 , but does not contain other information required by the final regs, the account will not lose its qualification as an ABLE account solely for that reason. To the extent that additional information is required by the final regs, the final regs will provide a transitionperiod to facilitate compliance with the additional requirements. © 2015 Thomson Reuters/Tax & Accounting. All Rights Reserved.