Tennessee Individualized Education Accounts (IEA)

A qualified disability expense is one that is related to the Account Owner’s blindness or disability and expenses intended to help maintain or improve health, greater independence, or quality of life. Education is a category within qualified disability expenses. To learn more about ABLE TN, see Qualified Expenses.

Eligible Tennesseans can own an ABLE TN account. The ABLE TN account is owned by the individual with the disability. To be eligible to open an ABLE TN account, he/she must meet the following criteria:

1. Be a Tennessee Resident
2. Have been diagnosed with a disability before he/she turned 26 years old. The disability onset will increase to 46 beginning January 1, 2025.
3. Meet one of the following options:

• eligible to receive Supplemental Security Income (SSI); or
• eligible to receive Social Security Disability Insurance (SSDI); or
• A qualified physician has diagnosed the individual as having a disability that is expected to last no less than 12 months; or
• The individual (or their legal representative) certifies that the individual qualifies based upon an impairment found on the Social Security Administrations List of Compassionate Allowances.

A contribution to an ABLE TN Account is considered a qualified distribution from a Tennessee Department of Education Individualized Education Account Program (IEA) for participants.

The statute governing the IEA Program, Tenn. Code Ann. § 49-10-1403 provides:

• 49-10-1403 (b) Parents shall agree to use the funds deposited in a participating student's IEA for any, or any combination, of the following expenses of the participating student:
• 49-10-1403 (b) (15) Contributions to an achieving a better life experience account in accordance with the ABLE Act, compiled in title 71, chapter 4, part 8, and the rules promulgated pursuant thereto, for the benefit of a participating student; provided, that the funds are used only for the student's education expenses subject to the rules established by the achieving a better life experience program and that the student meets the qualifications to participate in the achieving a better life experience program pursuant to the ABLE Act, and §529A of the Internal Revenue Code of 1986 (26 U.S.C. § 529A), as amended, and all rules, regulations, notices, and interpretations released by the United States department of treasury, including the internal revenue service.

There are also rules that complement the statute, Tennessee State Board of Education (SBE) Rule 0520-01-11-.06(1).

Additionally, the ABLE TN statute, Tenn. Code Ann. § 71-4-806(d), provides that contributions from a student’s IEA account to an ABLE TN account may only be expended for the students education expenses.

State Rule 1700-08-01-.05 (4) provides that amount(s) contributed to an ABLE TN account equal the amount received from the IEA program can only be used for Educational Expenses until the child is 30 years old. 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.

The contract year is July 1- June 30. Once you receive notification of amount your student will receive for the contract year, if you want to request contributions to an ABLE TN account and you do not have an existing ABLE TN account, you must:

1. Open an ABLE TN account with an initial $25 deposit. The account number will be in this format: 93XXXXXXX-01. The Parent/ Guardian who is the IEA account owner should be the Parent/Guardian for your child’s ABLE TN. Once your child’s ABLE TN account is opened, you can screen shot the account number or wait until the next business day to access the New Account Statement as you will need to submit proof of the establishment of the ABLE TN account to the IEA program.
2. Complete and submit the IEA ABLE TN Contribution Request Form. Funds requested for ABLE TN deposits must be equal to or less than the individual quarterly disbursement amount. Requests can be received by the IEA Program at any time before the next/upcoming quarterly disbursement but can only be processed at the time of that disbursement. The department will deposit the amount of the contribution from the next IEA disbursement into the ABLE TN account. Contributions marked as “recurring” will be withdrawn from each IEA payment disbursement and cannot exceed the amount of the IEA annual award for the contractual year and all contributions to the ABLE TN account cannot exceed the annual contribution limit for ABLE programs.
3. Report the ABLE TN contribution expense within the IEA Portal that corresponds with the quarter (reporting period) of the date of deposit AND upload a copy of the deposit confirmation (ABLE TN Financial Transaction Confirmation).

When your IEA funds are deposited into your ABLE -01 account, the IEA program considers those funds as spent. This is why ABLE contributions are included as one category on the expense report portal. Just as a family could purchase curriculum or pay a tutor with IEA funds, making an ABLE contribution is also an expense. Once the IEA funds are deposited with ABLE, the IEA program no longer manages those funds. The funds have left the IEA program via an eligible expense (an ABLE contribution), so IEA monitoring over those funds is terminated at that time.

Once the IEA deposit is made to the ABLE TN account (ending in -01), a financial Transaction Confirmation will be automatically generated and posted to the ABLE TN account.

The Transaction Confirmation may be access by logging in to your child's ABLE TN account. Once you are logged in, follow the option for “View Profile & Documents” and then look for the option that allows you to view statements and confirms. Select the account number ending in -01 and ensure that the year is appropriate for the deposit you are seeking.

All contributions are subject to a ten (10) calendar day hold before the monies are eligible for withdrawal. If you do not wish to close the ABLE TN account, do not request a full withdrawal of funds from the ABLE TN account because if you request a full withdrawal, the account will close automatically once it is withdrawn to $0.

You may request a check payable to the account owner or a third-party. If a bank account is associated with the ABLE TN account, payment via ACH may be requested directly into the bank checking or savings account.

IRS Publication 907 provides guidance relative to withdrawals from an ABLE account. You should retain your receipts or documentation for your records.

There will be a unique transaction source code, so you will know the amount of IEA monies you have contributed to your child’s ABLE TN account. Essentially, if $10,000 is contributed into your child’s ABLE TN account from the IEA program, you just know that you have $10,000 to withdraw for education expenses in the future. You have the flexibility to determine those expenses. Because disabilities differ in their nature and severity, and needs may differ among individuals with disabilities, you know best what your child needs, and you have the flexibility to decide those specific expenses that you believe are within education category. You should retain your receipts or documentation for your records. Education is a category within qualified disability expenses. All other deposits from other sources and their earnings and any earnings from the IEA deposits may be used for any qualified disability expense category.

No, ABLE TN does not require submission of documentation for any withdrawal made from your child’s ABLE TN account. You should retain all receipts and documentation for all withdrawals from your child’s ABLE TN account because as an ABLE program, we are required to aggregate all withdrawals made in a calendar year and report them to the IRS annually. The IRS could audit you to determine if the amount withdrawn was for qualified disability expense (remember, education is a category of disability related expenses).

ABLE TN reports annual to the Internal Revenue Service. Form 1099-QA is issued to report all aggregate distributions made from an ABLE TN account during the calendar year. Form 5498-QA is issued to report all aggregate contributions, fair market value of the account, opening of a new account, certification of a qualified account, and the disability code.

Also, ABLE TN sends monthly reports to the Social Security Administration for all ABLE TN Accounts including balance and withdrawal activity.

No action is required by you if you have IEA funds in the -02 portion of your child’s ABLE TN account. You can continue to make withdrawals from the -02 portion of the account. At this time, there is no specific date by which the -02 portion of the ABLE TN account needs to be withdrawn to $0.00.