Section 1700-08-01-.05 - CONTRIBUTIONS(1) Who May Make Contributions. One (1) or more Persons may make Contributions for a taxable year into an ABLE Account for the benefit for a Designated Beneficiary who is also an Eligible Individual during that taxable year. The Designated Beneficiary shall be an Eligible Individual at the time the ABLE Account is established, at the time of any Contribution to the ABLE Account, and at the time of a Distribution from the ABLE Account for Qualified Disability Expenses. All Contributions made to a Designated Beneficiary's ABLE Account are pooled and are subject to the terms and conditions of the Designated Beneficiary's Contract.(2) How Contributions May be Made. All Contributions to an ABLE Account shall be made in cash and not in property, except for Program-to-Program Transfers. For the purposes of these rules, "cash" means United States dollars in the form of negotiable checks. Cash Contributions may be made in the form of a check, electronic transfer or similar methods acceptable to the State. The State will only accept Contributions in the form of travelers' checks; starter checks; or money orders if required by a court order. Contributions may also be made through a Rollover; through a Program-to-Program Transfer; or as otherwise permitted by the Code.(3) Limit on Amount of Contributions.(a) Contributions made to a Designated Beneficiary's ABLE Account shall not include Excess Contributions. The State shall return the Excess Contributions to the Contributor, including all net income attributable to that Excess Contribution. The State shall return the Excess Contribution to the Contributor on a last-in-first-out basis until the entire Excess Contribution, along with all net income attributable to the Excess Contribution has been returned. The State shall ensure that the returned Excess Contributions are received by the Contributor on or before the due date, including extensions, for the Designated Beneficiary's federal income tax return for the taxable year in which the Excess Contribution was made. If an Excess Contribution and the net income attributable to the Excess Contribution are returned to a Contributor other than the Designated Beneficiary, the State shall notify the Designated Beneficiary of the Excess Contribution return at the same time the Excess Contribution is returned to the Contributor. For the purpose of the Contribution limitation contained in this subparagraph (a), Contributions do not include Rollovers or Program-to-Program Transfers.(b) Contributions made to a Designated Beneficiary's ABLE Account contributed since the establishment of the ABLE Account shall not exceed the limitation in effect under 26 U.S.C. § 529(b)(6). The Contributions toward the limitation shall include Contributions to any prior ABLE Account maintained by any State or its agency or instrumentality for the same Designated Beneficiary or any prior Designated Beneficiary. The State shall not accept any Excess Aggregate Contributions, and shall return all Excess Aggregate Contributions to the Contributor on a last-in-first-out basis until the entire Excess Aggregate Contribution, along with the net income attributable to the Excess Aggregate Contribution has been returned. The State shall ensure that the returned Excess Aggregate Contributions are received by the Contributor on or before the due date, including, extensions, for the Designated Beneficiary's federal income tax return for the taxable year in which the Excess Aggregate Contribution was made. If an Excess Aggregate Contribution and the net income attributable to the Excess Aggregate Contribution are returned to a Contributor other than the Designated Beneficiary, the State shall notify the Designated Beneficiary of the Excess Aggregate Contribution return at the same time the Excess Aggregate Contribution is returned to the Contributor.(4) Individualized Education Account Contributions into an ABLE Account. In the event that an Eligible Individual or an Eligible Individual's Legal Representative contributes funds from the Eligible Individual's IEA to the Eligible Individual's ABLE Account, the contributed IEA funds shall only be used for the Eligible Individual's educational expenses that constitute Qualified Disability Expenses. The limitation on using the Eligible Individual's IEA funds for educational expenses only shall be in effect until the Eligible Individual reaches the age of thirty (30). If the IEA funds in an Eligible Individual's ABLE Account have not been expended for educational expenses by the time the Eligible Individual reaches the age of thirty (30), then the unused IEA funds may be utilized by the Eligible Individual or the Eligible Individual's Legal Representative for any of the Eligible Individual's Qualified Disability Expenses.Tenn. Comp. R. & Regs. 1700-08-01-.05
Original rule filed October 8, 2015; effective January 6, 2016. Amendments filed December 4, 2018; effective 3/4/2019.Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.