Can a Beneficiary Contribute to Their Own Able Account

In some cases, a beneficiary can contribute to their own ABLE account, but it's not always straightforward.

The Social Security Act allows beneficiaries to contribute to their own ABLE accounts, but only if they're disabled and meet certain requirements.

This means that if you're a beneficiary with a disability, you may be eligible to contribute to your own ABLE account.

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ABLE accounts are tax-advantaged savings accounts designed to help individuals with disabilities and their families save funds for disability-related expenses.

These accounts are intended to supplement benefits from Medicaid, SSI, employment, and other sources, allowing beneficiaries to maintain eligibility for means-tested Federal benefit programs.

Money saved in an ABLE account won't affect an individual's eligibility for SSI up to $100,000, and will allow them to keep receiving Medicaid and other public benefits.

NJ ABLE, New Jersey's ABLE plan, is administered through DDS in partnership with Ascensus College Savings Recordkeeping Services.

With NJ ABLE, individuals can save up to $18,000 annually and up to a $305,000 lifetime max.

The definition of "disability-related expenses" is very broad, so funds in an NJ ABLE account can be used to purchase almost anything that would enhance a person's life.

Allowable expenses include education, housing, transportation, personal support services, and more, and are not limited to medical necessity.

Interest income earned by the account is not taxed.

Here are some key facts about ABLE accounts:

ABLE account contributions are a vital aspect of these tax-advantaged savings accounts. You can contribute to your own ABLE account, and so can others on your behalf.

You can deposit contributions into your ABLE account via check, electronic funds transfer, or payroll direct deposit, if your employer offers it. Direct deposit of Government Benefits, such as Social Security or Supplemental Security Income, can also be made directly into your ABLE account.

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You can also use gifting platforms like UGift or Gift of Independence to contribute online via electronic transfer (ACH) or debit card. Tax Refund Deposit is another option, allowing you to have your U.S. Income Tax refund directly deposited into your ABLE account.

ABLE account owners can also roll over funds from another qualified ABLE program or qualified tuition program into their account. However, it's essential to note that rolled-over funds, when combined with contributions made in the same tax year as the rollover, may not exceed the annual gift tax exclusion.

Here are some common ways to contribute to an ABLE account:

Understandably, the rules surrounding ABLE accounts can be complex. The individual with the disability is the account owner, but anyone can contribute to the account.

To make contributions, the account owner must have a disability that began before age 46, as of January 1, 2026. This is a change from the previous age limit of 25 and younger. The earnings portion of a Non-Qualified Withdrawal is subject to federal income taxation, and an additional 10% federal tax will be assessed.

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The annual contribution limit to an ABLE account is $18,000, but employed designated beneficiaries may contribute more, up to the lesser of their compensation for the tax year or the poverty line amount applicable in their state of residence. For example, in 2023, the poverty line amount for a one-person household in the 48 contiguous states and the District of Columbia is $14,580.

Funds in an ABLE account can be used to purchase almost anything that enhances a person's life, including education, housing, transportation, and personal support services. The funds are intended to supplement, not supplant, government benefits.

Here's a summary of the annual contribution limits:

Note that the poverty line amounts can vary by state and year, so it's essential to check the current poverty line amount for your state and household size.

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ABLE accounts offer several contribution options, making them a valuable tool for individuals with disabilities and their families.

The annual contribution limit is $18,000 in 2024, but this can be increased if the designated beneficiary has wages. If they earn $14,580 or more, they can contribute up to $32,580.

Employed designated beneficiaries who don't participate in an employer-sponsored retirement plan can make contributions above the annual limit, up to the lesser of their compensation or the poverty line amount for their state. For example, in 2023, the poverty line amount is $14,580, so a designated beneficiary in Nevada who earns $14,580 or more can contribute up to $32,580.

Note: The poverty line amount for a one-person household in the 48 contiguous states and the District of Columbia for 2023 is $14,580.

In Texas, you have options for special needs planning that can complement or replace a Special Needs Trust. A Texas ABLE account can be used in conjunction with, or as an alternative to, a Special Needs Trust.

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A Texas ABLE account can be a valuable addition to your special needs planning, allowing you to save for qualified expenses without affecting government benefits. You can have both a Texas ABLE account and a Special Needs Trust, giving you flexibility in your planning.

A Texas ABLE account can help you save for a range of qualified expenses, from education and employment to healthcare and transportation.

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ABLE 2.0 was introduced in Congress in 2017 to address certain limitations of the ABLE Act of 2014.

The Tax Cuts and Jobs Act included provisions of H.R. 1896, also known as the ABLE to Work Act, which allows employed designated beneficiaries to make contributions above the annual ABLE contribution limit.

For example, if a designated beneficiary living in Nevada earns $14,580 or more in 2024, they may contribute up to $32,580 into their ABLE account for the year.

The TCJA also integrated the ABLE Financial Planning Act, allowing for tax-free rollovers of funds in qualified tuition programs (commonly called 529 plans) into qualified ABLE accounts of the same beneficiary or their family member.

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Notably, the rolled-over funds, when combined with contributions made in the same tax year as the rollover, may not exceed the annual gift tax exclusion.

The ABLE Age Adjustment Act increased the age of ABLE eligibility to an individual who has the onset of disability or blindness before age 46, effective January 1, 2026.

This expansion of ABLE eligibility will substantially increase the number of individuals who will qualify for the tax-advantaged accounts, by an estimated six million people, including one million veterans.

The age adjustment is widely considered the most important amendment to the ABLE Act to date, and it's a significant step forward in making ABLE accounts more accessible to those who need them.

The ABLE Act and Regulations are designed to support individuals with disabilities and their families. The Act was enacted in 2014, allowing states to establish tax-advantaged savings programs.

The ABLE Act has undergone changes and expansions since its inception, including the introduction of ABLE 2.0 in 2017. This update included provisions to allow employed designated beneficiaries to make contributions above the annual ABLE contribution limit.

ABLE accounts are administered through state programs, such as NJ ABLE, which is administered through DDS in partnership with Ascensus College Savings Recordkeeping Services. NJ ABLE allows individuals to save up to $18,000 annually and up to a $305,000 lifetime max.

Here are some key regulations to keep in mind:

Funds in your ABLE account are generally disregarded for purposes of determining eligibility to receive government assistance or benefits.

Up to $100,000 of the balance of funds in an account is excluded from the resources of the beneficiary, as stated by the SSA.

Any amount by which an account balance, including any earnings, exceeds $100,000 is considered a countable resource of the beneficiary.

A withdrawal for a housing-related Qualified Disability Expense is counted as a resource if retained into the month following the month of receipt.

Here's a breakdown of what counts as a countable resource:

Withdrawals that are not spent on a Qualified Disability Expense are also counted as a resource. However, withdrawals for Qualified Disability Expenses (other than housing) retained beyond the month received are excluded from a beneficiary’s countable resources.

The ABLE Act is a federal law that allows individuals with disabilities and their families to save private funds for disability-related expenses. It's a game-changer for those who rely on Medicaid and Supplemental Security Income (SSI) benefits.

The law was enacted in 2014 and is designed to encourage and assist individuals with disabilities to save for their future. ABLE accounts are tax-advantaged savings accounts that can be used to supplement benefits provided through Medicaid, SSI, and other sources.

Here are some key benefits of ABLE accounts:

The ABLE Act also introduced the "ABLE to Work" provision, which allows employed individuals with disabilities to contribute additional funds to their ABLE accounts. This provision allows for contributions above the annual ABLE contribution limit, up to the lesser of the individual's compensation or the poverty line amount applicable in their state.

Overall, the ABLE Act provides a valuable resource for individuals with disabilities and their families to save for their future and maintain their independence.