Achieving A Better Life Experience: ABLE Accounts
An ABLE tax-advantaged savings account provides a way for individuals with disabilities who became disabled before age 26 to save money without losing their eligiblity for Medicaid and Supplemental Security Income (SSI). Contributions may be made by the beneficiary, family and/or friends.
While ABLE is a federal law, it authorizes the states to pass legislation to establish these accounts. The amount that may be contributed can vary by state. Check the law of your state to find out if ABLE is available in your state, and, if so, the contribution limit..
Non-deductible contributions of cash of up to the annual gift tax exclusion can be made to an ABLE for a person who became blind or disabled before age 26. As of 2017, the annual gift tax exclusion is $14,000 a year
Distributions of earnings from the account are tax-free if the funds are used for health care, housing, transportation, education, and job training. Per the IRS, health care expenses do not have to be medically necessary.
ABLE contriutions are treated as gifts by the contributor for tax purposes.
A person may only have one ABLE account at a time.
NOTE: After the beneficiary dies, states can claim any money remaioning in the account to recover expenses paid by Medicaid.