I manage an ABLE (Achieving a Better Life Experience) account for my disabled child. My spouse and I must pay for some of my child's Qualified Disability Expenses (QDEs) that aren't able to be paid for directly from the ABLE account.
It's unclear to me how soon reimbursements must be made from the ABLE account for QDEs paid on behalf of my child (or if we can reimburse ourselves for payments made on my child's behalf). For example, can the ABLE account be treated similarly to an HSA whereby receipts for QDEs are saved and reimbursed at a later date?
The section of IRS code that seems most relevant is Treas. Reg. §1.529A-3(a)(1):
"The designated beneficiary may treat as having been paid during the preceding taxable year qualified disability expenses paid on or before the 60th day immediately following the end of the designated beneficiary's preceding taxable year. Qualified disability expenses treated, pursuant to the rule in the preceding sentence, as having been paid during the designated beneficiary's taxable year immediately prior to the year of their actual payment may not be included in the total qualified disability expenses for the year in which they were paid."
My interpretation of this is that QDEs paid 60 days after the the preceding taxable year can be considered as part of the preceding taxable year. So if a QDE was paid for prior to March 2, 2026, it could be considered a QDE for 2025.
This doesn't really answer my question, however, which is about the *distribution from the ABLE account* not the actual QDE payment.
I did find this relevant paragraph from IRS Publication 907 which suggests distributions must occur in the same tax year as the QDEs:
"If distributions from your ABLE account during a year aren't more than your qualified disability expenses for that year, no amount is taxable for that year. If the total amount distributed during a year is more than your qualified disability expenses for that year, the earnings portion of the distribution is included in your income for that year, after the calculation in Table 1."
So is it as simple as the distribution (or reimbursement in this example) must occur in the same tax year as the QDE payment to the third party?
