Montana ABLE Account (529A Plan) Deductions

An Achieving a Better Life Experience (ABLE) account, also known as a 529A Plan, is a savings account for people with disabilities to contribute money tax-free for use on expenses related to a disability.

You can learn more about ABLE Accounts and qualified disabilities from the IRS.

To establish your Montana ABLE account or for additional information, call the Montana ABLE Program at (888) 609-3461 or visit savewithable.com/mt.

Benefit

You may be able to deduct contributions from your taxable income:

• Single: Up to $3,000
• Married Filing Jointly: Up to $6,000

Additionally, you do not pay taxes on withdrawals from an ABLE Account if you use the withdrawal to pay for qualified expenses related to your disability.

Eligibility

You are allowed to claim this deduction if:

• You're the account's designated beneficiary;
• Your spouse is the designated beneficiary; or
• You're the parent, grandparent, sibling, or child of the designated beneficiary by blood, marriage, or legal adoption.

Contributions are eligible regardless of the beneficiary's residency or the state in which the account is administered.

Qualified Expenses

Qualified disability expenses include any expenses related to the blindness or the disability of the account owner such as:

• Education
• Housing
• Transportation
• Personal support services
• Assistive technology
• Health

Recapture Tax and Penalties

If you withdraw contributions and earnings for purposes other than to pay for qualified disability expenses, related contributions may be subject to a recapture tax of 5.9%, and related earnings are included in gross income.

Contributing With Your Montana Refund

If you are due a Montana state refund, you may have part or all of your refund direct deposited into an existing ABLE Account on your Montana Individual Income Tax Return (Form 2).

You must already have an established ABLE Account. Your refund cannot be used to create a new account.