How can I rollover a 529 account to an ABLE account?

Achieving a Better Life Experience (ABLE) account is a tax-advantaged savings account for individuals with disabilities and their families. Distributions are tax free if used to pay the beneficiary's qualified disability expenses, which may include education expenses. 

Rollovers from a 529 account plan to an ABLE account are permitted without incurring federal income tax or penalties. Any amount distributed from a 529 plan isn't taxable if it's rolled over to an ABLE account for the benefit of the same beneficiary or for the benefit of a member of the beneficiary’s family (including the beneficiary’s spouse). 

Please consult with a licensed tax professional to determine if you are eligible and/or review IRS Publication 970.

Keep in mind that we only support indirect rollovers, which means you will need to transfer the funds from your Wealthfront 529 account directly to a linked bank account. From there you can transfer those funds to your ABLE account. To start the process, log in to your Wealthfront account, click “Transfer Money” > “Withdraw”, select the 529 account, and then choose the non-qualified option.

Here are a few things to consider when processing an indirect rollover:

• The IRS typically only allows one tax-free rollover of a 529 account per beneficiary in a 12-month period. If you violate the 12-month rule, you must treat the transaction as a non-qualified distribution and pay federal income tax and a 10% penalty on the earnings.

• To avoid tax consequences, the money you receive in an indirect rollover must be contributed to your new account within 60 calendar days. Please note that Wealthfront does not track this 60-day window.
• An indirect 529 plan rollover can be taxable at the state level, even if it's not subject to federal taxes.