An ABLE account sometimes referred to as a 529 ABLE account, may be established as a tax advantaged savings account to provide for the care of individuals with disabilities. The Achieving a Better Life Experience (ABLE) account regulations were passed in order to recognize the unique financial burdens inherent in caring for a disabled person. Individuals with disabilities may only have one ABLE account at a time and the individual with the disability is deemed to be both the account owner and the designated beneficiary. ABLE accounts may be transferred or rolled over into new ABLE accounts for the same beneficiary. Contributions to the account are made with after tax dollars and are allowed to grow tax deferred. The contributions and the growth may be used tax free by the beneficiary for qualified care and quality of life expenses. The use of the funds for non qualified expenses will be seen as taxable income to the recipient. Tax free withdrawals may be made by the beneficiary to cover qualified expenses incurred or in anticipation of paying expenses to be incurred. Qualified expenses would include things such as:
- Medical care
- Wellness care
- Housing expenses
- Assistive technology
- Job training
SecuritiesCE Explains Able Account
In order to qualify for an ABLE the account the individual must have been disabled by the time he or she reached their 26th birthday. The maximum annual contribution to an ABLE account is equal to the annual tax free gift limit of $18,000 and is subject to change each year. The assets in the ABLE account will not impact the disabled persons eligibility for many assistance programs. The first $100,000 in assets in the ABLE account are excluded when estimating the amount of resources available to the person when calculating their eligibility for assistance. However, ABLE account balances which exceed $100,000 can cause the beneficiary of the account to be placed in a suspended status for receiving supplemental security income or SSI until all resources in the ABLE and other accounts owned by the individual fall to $100,000 or lower. Upon the death of the beneficiary of an ABLE account the remaining assets will be used to repay Medicaid for any payments made to the beneficiary. If you see questions relating to able account they would most likely be on the application of the concepts here. Pay particular attention to the tax and ownership aspects of the ABLE account.
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Securities Institute of America, Inc.