Able Account Michigan - A Comprehensive Guide to Special Needs Planning

In Michigan, families with special needs children have a unique opportunity to plan for their loved one's future through the Able Account. This tax-advantaged savings program allows families to save up to $14,000 per year for disability-related expenses.

The Able Account is a state-run program, which means it's specifically designed to meet the needs of Michigan residents.

By contributing to an Able Account, families can save for a wide range of disability-related expenses, including education, housing, transportation, and healthcare costs.

An ABLE account is a 529A savings account set up under Section 529A of the Internal Revenue Code, similar to a college savings plan.

The MiABLE program, administered by the Department of Treasury's Student Financial Services Bureau in Michigan, offers investment opportunities and tax incentives for family members and others to save funds for individuals with disabilities.

An eligible individual with a disability sets up the ABLE account and is both the owner and beneficiary of the account. Each individual can have only one ABLE account.

To be eligible, an individual must have a significant disability that began before the age of 26. If a person meets the onset age requirement, they can be eligible to set up an ABLE account through one of two ways.

Here are the two ways to be eligible to set up an ABLE account:

An individual can be older than 26 as long as the onset of the disability occurred before their 26th birthday.

To set up an ABLE account in Michigan, you'll need to meet the eligibility requirements and choose a state to administer your account. You can set up an account in Michigan, even if you're not a resident of the state.

An eligible individual with a disability sets up the ABLE account, and is the owner and beneficiary of the account. Each individual can have only one ABLE account.

To be eligible, an individual must have a significant disability that began before the age of 26. If a person meets the onset age requirement, there are two different ways to be eligible to set up an ABLE account.

You can set up your account in any state that has an ABLE program, but you'll need to choose one to administer your account. Some states require that you be a resident of the state to set up an ABLE account, while others, like Michigan, have nationwide programs that allow both residents and non-residents to set up accounts.

Here are the steps to set up an ABLE account in Michigan:

As you set up and manage your ABLE account in Michigan, it's essential to understand the rules and guidelines surrounding account ownership and eligibility. An eligible individual with a disability sets up the ABLE account, and this individual is the owner and beneficiary of the account.

Each individual can have only one ABLE account, so make sure to review your eligibility before setting up a new account. To be eligible, an individual must have a significant disability that began before the age of 26.

If a person meets the onset age requirement, there are two different ways to be eligible to set up an ABLE account. An individual who already receives benefits under the Supplemental Security Income (SSI) and/or Social Security Disability Income (SSDI) programs is automatically eligible to set up an ABLE account.

An individual who does not receive SSI or SSDI can still be eligible to set up an ABLE account if he or she meets Social Security's definition and criteria regarding "significant functional limitations", and receives a letter of certification from a licensed physician.

Note that a person does not need to be under the age of 26 to be eligible. The person can be older than 26, as long as the onset of the disability occurred before his or her 26 birthday.

Contributions to an ABLE account can be made by family members, friends, and the individual owning the account, with a total annual contribution limit of $14,000, matching the federal gift tax exclusion.

The total aggregate account limit over time is set individually by states, based on their limit for education-related 529 savings plans. In Michigan, the limit is $500,000, which includes any other 529 prepaid tuition or college savings accounts of the beneficiary.

For individuals who are recipients of SSI, the ABLE Act sets some additional limitations, exempting the first $100,000 in an ABLE account from the SSI $2,000 resource limit.

Contributions to a MiABLE account are deductible on the donor's Michigan Income Tax return, up to $5,000 for a single return and up to $10,000 on a joint return.

Payments made from an ABLE account are referred to as "distributions", and as long as they're used for qualified disability expenses, they're not taxed.

The distributions from the account, including earnings, are not taxed if used for qualified disability expenses.

If a distribution is not used for a qualified disability expense, it could be subject to income tax and a 10 percent penalty.

Contributions to a MiABLE account are deductible on the donor's Michigan Income Tax return, up to $5,000 for a single return and up to $10,000 on a joint return.

Each state establishes its own rules for state income tax deductions, which are not the same in every state with an ABLE program.

The contribution limits for ABLE accounts are quite straightforward. For 2017, the total annual contribution by all participating individuals cannot exceed $14,000.

This limit is the same as the federal gift tax exclusion and may increase over time as the cost of living increases. It's essential to note that this is an aggregate limit, meaning the total contributions from all individuals, including the beneficiary and family members, cannot exceed this amount.

Each state sets its own total aggregate account limit, which is based on the state's limit for education-related 529 savings plans. In Michigan, for instance, the limit is $500,000, while in other states, it's $300,000.

If you're an individual receiving SSI, there are additional limitations to be aware of. The first $100,000 in an ABLE account is exempt from the SSI $2,000 resource limit.