ABLE Accounts for the Disabled

Anne Kates Smith discusses in her article in Kiplinger’s magazine a law enacted at the end of last year which authorizes tax-advantaged savings accounts for individuals with disabilities knows as ABLE (Achieving Better Life Experience) accounts.

Anyone can open an ABLE account for an eligible beneficiary. This is someone who has a disability that was present before age 26 and that is “marked and severe” functional limitations. Individuals who have met the disability standards for Supplemental Security Income (SSI) will qualify as will those with conditions such as autism, Down syndrome or blindness.

A beneficiary can have only one ABLE account.

Contributions to the account are after-tax, and earnings and distributions from the account will not count as taxable income. Annual contributions must be under the federal gift-tax exemption ($14,000 in 2015), and the total account cannot exceed state-based limits for 529 accounts.

The expenses covered include educational expenses, assistive technology, transportation costs, specialized housing and job training.

Account assets generally will not affect eligibility for other programs with the exception of SSI which may be impacted if account assets exceed $100,000.

Consult your estate planning attorney for further information.