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