ABLE Accounts: A New Savings Account for People With Disabilities
On December 19, 2014, President Obama signed into legislation the “Achieving a Better Life Experience Act of 2014“, often referred to as the “ABLE Act of 2014“. This new legislation will permit states to determine an ABLE program, beneath which eligible folks with disabilities can arrange an ABLE account. These accounts can be modeled after Section 529 (faculty financial savings) accounts.
Who will have an ABLE account? Eligibility can be restricted to those that changed into significantly disabled earlier than turning 26 years of age. An older disabled individual will have such an account, supplied the individual’s incapacity arose previous to age 26. An individual can end up his/her incapacity by means of receipt of Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) or by means of offering a incapacity certification, beneath regulations that the government will factor.
Are there any buck limits for such accounts? The general annual contributions from all folks to an eligible particular person’s ABLE account are restricted to the reward tax exclusion quantity (lately $14,000.00). The mixture of all contributions to anyone account is the utmost quantity allowed by means of the state for Section 529 accounts (lately $310,000.00 in Oregon). An eligible particular person can handiest have one such account.
Are there tax benefits to having such an account? Income earned by means of the accounts would now not be taxed, supplied account withdrawals are used for certified bills. Contributions to the account don’t seem to be tax deductible.
How can the account be used? ABLE account budget will also be withdrawn to pay any bills associated with the individual’s incapacity, together with housing, transportation, schooling, employment coaching, assistive era and private beef up products and services, well being, prevention and wellness, monetary control, prison charges, funeral and burial products and services.
Will an ABLE account have an effect on eligibility for Medicaid? No, having an ABLE account would now not jeopardize a person’s eligibility for means-tested receive advantages methods equivalent to SSI or Medicaid. This is among the important benefits of ABLE accounts. Under present legislation, folks with greater than $2,000.00 in sources don’t seem to be eligible for SSI. However, the primary $100,000.00 in an ABLE account would now not be counted in opposition to the $2,000.00 useful resource prohibit.
How quickly can such an account be established? Ah, there may be the rub. Two issues wish to occur earlier than an ABLE program will also be established right here in Oregon. The U.S. Department of the Treasury has to generate the principles (assume effective print) through which this law is applied, and that might take so long as six months. Second, the State of Oregon will wish to “decide in” to the ABLE program and make allowance for such accounts within the state.
Watch out for federal and state motion in regard to implementation of this new legislation.
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