The Achieving a Better Life Experience (ABLE) Act, which was created by Congress in 2014, allows people with disabilities and their families to save up to $100,000 in accounts for the benefit of a disabled person. The funds can be saved without jeopardizing the individual’s eligibility for Medicaid, Supplemental Security Income (SSI) and other government benefits. ABLE accounts may be opened by anyone with a disability as long as the disability began before the person turned 26.
Starting in 2018, the amount of money that can be deposited in an ABLE account per year without jeopardizing public benefits will rise from $14,000 to $15,000. The amount that can be deposited in an ABLE account is tied to the federal gift tax exclusion, which has also risen to $15,000.
Other changes to the program in 2018 include the following:
- Traditional 529 plans can now be rolled into ABLE accounts. This helps parents utilize funds that were accumulated in traditional college savings plans before learning their child had a disability.
- Individuals with disabilities who are working may be able to save up to the federal poverty level. Rather than savings being capped at $15,000 per year, in some cases the new law will allow people with disabilities to save their earnings beyond that threshold up to the federal poverty level to potentially accumulate as much as $27,060 per year in savings.
- A note of caution: There are no real “safeguards” built into the legislation to help people monitor contributions that go over $15,000. There have been delays implementing this new part of the law. Legal and financial professionals fear that mistakes are easy to make and benefits could inadvertently be jeopardized.
Setting up an ABLE account is often a solid way to save money toward future expenses for an individual with disabilities. As with most federal or state programs, there are intricacies in the rules that should be understood prior to establishing an account. Seek the assistance of a qualified special needs attorney to ensure that you understand the process before tying up funds.
If you would like to speak to one of our attorneys about the creation of an ABLE Account or use of an ABLE account in conjunction with a special needs trust for your loved one, please contact our Rochester office at (585) 232-5300. Planning sessions can be arranged in any of our offices, Rochester, Canandaigua or Newark, or if you or your loved one is home-bound, we can come to you.