Questions & Answers

What is the Montana Achieving a Better Life Experience (ABLE) Recapture Tax?

If you have a recapturable withdrawal from your Montana ABLE account, you have to pay a recapture tax.

A recapturable withdrawal is a withdrawal from contributions that reduced your Montana adjusted gross income (AGI) and is not used to pay for qualified disability expenses of the beneficiary of the account.

To determine the portion of withdrawal that reduced your Montana AGI you must:

  1. Take your total contributions divided by the total account balance before the withdrawal. This is your ratio.
  2. Multiply the amount of the withdrawal by the ratio. This is the amount of contribution included in the withdrawal.
  3. If the amount from Step 2 is more than the contributions that have not been previously used to reduce AGI, the difference is subject to recapture.

Multiply the amount of your recapturable withdrawal by 6.9% and enter the result here. This is your ABLE recapture tax.

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