The MSRB has recently determined that certain ABLE Accounts are subject to MSRB regulation because of their similarity to Section 529 Plans. Dealers and representatives that effect transactions in municipal fund securities, as in the sale of Section 529 Plans, must comply with MSRB Rules. The same requirements will apply to the sale of state-implemented ABLE accounts.
What are ABLE accounts?
ABLE Accounts were created by the ABLE (“Achieving a Better Life Experience”) Act of 2014. The Act helps ease the financial strain of individuals with disabilities by permitting the opening of tax-free savings accounts that can cover qualified expenses such as education, housing, transportation, employment support and training, certain technology expenses, and health prevention and wellness services. These savings accounts can supplement benefits provided through private insurances, social programs and other sources.
ABLE Accounts are available in all states like Section 529 Plans, and share similar contribution limits, tax treatment and reporting requirements. Beneficiaries may have either an ABLE account or a traditional 529 qualified tuition program. Rollovers from an ABLE account may be made to a traditional 529 plan if a beneficiary is no longer deemed disabled, or to the traditional 529 plan of a family member if the funds are not used.
Series Exam Impact
Series 7, 9/10, 24, 52, 53, 65 and 66 exams may include questions on these accounts. For more detail see MSRB Rule D-12 Notice and Interpretations.
Check back for regular updates from Knopman Marks to keep you up-to-date with the latest rule changes.
