ABLE Account Guide for Special Needs Planning

An ABLE account is a type of savings account designed to help individuals with disabilities save for the future without jeopardizing their government benefits.

To be eligible for an ABLE account, you must have a disability that occurred before age 26 and receive benefits from the Supplemental Security Income (SSI) program or have a certification from a doctor stating your disability meets the Social Security Act's definition of disability.

You can contribute up to $15,000 per year to an ABLE account, and the funds grow tax-free.

An ABLE account is a tax-advantaged savings account for individuals with disabilities.

The ABLE account is also known as a 529A account, making its relationship with 529 college savings accounts clear.

It's a way to save money without impacting eligibility for means-tested government benefits, such as SSI and Medicaid.

The ABLE account is designed to help individuals with disabilities manage their finances and cover qualified disability expenses.

1 in 4 adults in the U.S. are living with a disability, and this account offers a tax-advantaged way to save for the future.

ABLE accounts are available to individuals who became disabled before their 26th birthday.

You can use money in the account for expenses related to your disability, including transportation, food, education, and housing.

ABLE accounts are tax-advantaged savings accounts for individuals with disabilities. They're designed to help families save for the future without affecting the individual's eligibility for SSI, Medicaid, and other means-tested public benefits.

The beneficiary of the account is the account owner, and an individual can only have one ABLE account. This means you can't have multiple accounts for the same person.

Contributions to an ABLE account are allowed, but the specifics are not detailed in the provided article sections.

To be eligible for an ABLE account, you must have met one of the following requirements before the age of 26:

The account owner can be any age, but the age of onset of disability must have occurred before their 26th birthday.

ABLE accounts are a type of savings plan that can be used for individuals with disabilities. They are similar to 529 plans for college savings, and can even be rolled over into an ABLE account for a qualified beneficiary.

Contributions to an ABLE account can come from anyone, including the account owner, and can be made up to the federal gift tax exclusion for that year, which is $17,000 in 2023. If the beneficiary works and doesn't contribute to a retirement plan, they can contribute an additional amount equal to the lesser of their annual compensation or the federal poverty level for an individual, which is $12,060 in 2018.

Up to $100,000 in an ABLE account is exempt from the Supplemental Security Income (SSI) asset limit, and earnings from the account are exempt from federal income tax. Money spent from the account must be used for qualified expenses, such as education, housing, transportation, and job training.

Some states also make contributions to an ABLE account deductible from state income tax. It's worth noting that while an ABLE account can be used to save for qualified expenses, it's not a replacement for other types of savings or financial planning.

Here are some programs that an ABLE account will not affect eligibility for, up to the plan limit of $235,000 to $596,925:

Contributions to an ABLE account are subject to annual and lifetime limits. The annual limit is $16,000 in 2022, and it's also the maximum amount you can gift someone without reporting it to the IRS.

If you have a job and don't participate in an employer-sponsored retirement plan, you can contribute up to the federal poverty level for a one-person household, which is $13,590 in the continental USA for 2022.

Some states have set lifetime contribution limits for ABLE accounts, with many exceeding $300,000 per account. This means you can contribute more to an ABLE account than the annual limit, but you'll need to check with your state's specific rules.

The first $100,000 in an ABLE account is not counted as an asset for SSI eligibility purposes, which is a big plus for beneficiaries who receive SSI payments.

Here's a quick rundown of the annual contribution limits:

Keep in mind that the ABLE program has a "Medicaid Pay-Back" provision, which means any remaining funds in an ABLE account when the owner dies may be subject to a reimbursement claim by Medicaid for expenses from the time the account was open.

You can enroll in any state's ABLE program, regardless of where you live, as long as the program accepts out of state residents. Check the individual state pages to see which programs are accepting out of state enrollment.

Some states, like Ohio, Nebraska, and Tennessee, offer ABLE programs that are available nationwide, while others, like Florida, only accept in-state residents.

You'll have multiple options to establish an ABLE account with different investment strategies, similar to 529 college savings plans. Choose an investment strategy that aligns with your needs and risk tolerance.

You can change your investment choices in your ABLE account up to two times per year.

You can have only one ABLE account per beneficiary, so it's essential to choose the right one.

The beneficiary must be under 65 years old to open an ABLE account, and they must have a disability that meets the Social Security Administration's (SSA) definition.

States play a crucial role in administering and regulating ABLE plans.

Most states have joined collaborative structures, combining their individual ABLE plans under the same program design and fee structure.

Individuals can open ABLE accounts directly through the plan, as most ABLE plans are direct-sold.

The ABLE National Resource Center, managed by the National Disability Institute, offers a map with details of each state’s ABLE program.

Comparing the features of different ABLE plans is essential to making an informed investment decision.

You can use the ABLE National Resource Center's tool to compare up to three ABLE plans at a time.

A Special Needs Trust can be a powerful tool in planning for your child's financial future. It's a separate account that holds assets for the benefit of a person with special needs, without affecting their government benefits.

One of the key benefits of a Special Needs Trust is that it can be used in conjunction with an ABLE account. While an ABLE account and a Special Needs Trust share some similarities, they serve different purposes and can be used together to achieve your goals.

A Special Needs Trust can be used to hold assets that exceed the $100,000 limit in an ABLE account, without affecting government benefits. This can be especially important if you have a larger estate or want to leave a legacy for your child.

It's worth noting that a Special Needs Trust can also be used to hold assets that are not eligible to be held in an ABLE account, such as real estate or business interests.

Here are some key programs that a Special Needs Trust can help protect your child's eligibility for:

A Special Needs Trust can provide peace of mind and financial security for your child's future, while also protecting their government benefits.