ABLE Accounts

ABLE accounts

Thursday, December 6, 2018

Here at SWM we try to encourage diversity and also learning about different things to help you enjoy a better life and be more aware of the world around you. Today we have some information here about ABLE accounts.

ABLE accounts also known as “Achieving a Better Life Experience” account are tax favored savings account for eligible blind and disabled individuals. They are kinda like Educational Savings Accounts, also known as ESA, but for blind & disabled. These savings accounts helps pay for and save for disabled expenses

Some key facts to note:

  • they are not tax deductible contributions
  • they are also known as 529 ABLE or 529A accounts.
  • they are a state-run savings plan
  • distributions including earnings are tax free for qualified disability expenses
  • they can include housing, education, transportation, health, prevention & wellness, employment training, assistive tech, personal support services for those that are eligible
  • they can be setup for someone before age 26 with blindness and disability if either
  • a person is entitled and eligible for one if blind or disabled under Title ii & xvi of the SS act.
    • ¬†filed a disability certification with qualified ABLE program & diagnosis & impairments are signed & certified to have medical determination of physical or mental impairment that is severe or apparent functional limitations that can result in death or last & expect to last continuous not less than 12 months
    • ¬†blind per ss act
  • is generally disregarded for purpose of determining eligibility for benefits under ssi & other mean tested fed programs
  • designated beneficiary are limited to only one ABLE acct at a time.
  • the year’s total distribution for qualified disability expense divided by year’s total distributions multiplied by earnings portion of year’s distributions equals the amount nontaxable for the year.
  • Is reported as other income on taxes if taxable and may also be subject to 10% penalty as non-qualified distribution on 5329.
  • contribution not tax deductible and only can be done in cash & cash equivalents
  • anyone can contribute to ABLE account.
  • is subject to annual contribution limit and a cumulative balance limit
  • Has an annual gift tax exclusion but 2018 ABLE account beneficiaries amount up to what they earn if they work. limited to poverty line amount for 1 person household. designated beneficiaries are not eligible to make this additional contribution if employer contributes to a workplace retirement plan on their behalf
  • cumulative limit is set by the state and usually same as qualified tuition plan limit.
  • designated beneficiaries are eligible to claim nonrefundable retirement savings contribution credit
  • balances in these accounts not use to consider for federal means-testing programs.
  • can rollover QTP 529 programs to able programs without penalty subject to limitation. can’t be w/in 12 months of another previous transfer.
  • see rules about who is family

Author: savvywealthmedia

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