Monday, July 31, 2017

ABLE Accts Part #1 : What is ABLE?

In December 2014, Congress passed the Stephen Beck, Jr. Achieving a Better Life Experience Act, which added Section 529A to the federal tax code. This enables eligible individuals with disabilities to save money in a tax-exempt account that may be used for qualified disability expenses. This will allow qualified individuals with disabilities to save money while keeping their eligibility for federal public benefits.
How much can you save in an account?
The total annual contributions into an ABLE account by all contributors combined, including family, friends and the beneficiary themselves, for any given tax year is $14,000. The amount may be adjusted periodically to account for inflation. The total limit over time that could be made to an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts. Many states have set this limit at more than $300,000 per plan. 
What is the impact on benefits: SSI, SSDI, Medicaid, others
One of the most remarkable things about an ABLE account is that it allows you to accumulate more than $2,000 in assets without losing your federally funded means tested benefits. This includes SSI and Medicaid. Funds in an ABLE account are not taken into consideration when determining eligibility for these types of programs. 
 There is one exception, however, related to ABLE account holders that are also receiving SSI benefits.  If you are receiving an SSI check, you will continue to do so until your ABLE account goes over $100,000. Since the annual contribution limit to an ABLE account is $14,000, it will take quite some time for ABLE beneficiaries to accumulate enough assets in the account to approach this $100,000 threshold.
Once an ABLE account exceeds $100,000, your SSI check will be suspended until such time as the account balance falls back below the $100,000 threshold. Although your SSI benefits may be suspended if you exceed the $100,000 threshold for an ABLE account, your Medicaid benefits will remain intact.
How many accounts can a person have?
The law prohibits any person from having more than 1 ABLE account at any given time.
Who can contribute to the account?
Anyone can contribute into an ABLE account including friends, family, and the beneficuary (the account holder). 
Does a person need to wait for his state to launch a program?
No.  While the original law passed in 2014 did stipulate that an individual had to open an account in their state of residency, this provision was eliminated by Congress in 2015.  This means that regardless of where you might live and whether or not your state has decided to establish an ABLE program, you are free to enroll in any state’s program provided that the program is accepting out of state residents.
How many ABLE programs are open?
The first ABLE program was launched in June of 2016.  Since that time, over 20 additional states have launched ABLE programs, most of which are enrolling individuals nationwide. 

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