3+ Things You Need To Know About ABLE Accounts
The Importance Of ABLE Accounts
ABLE accounts were created in response to the high poverty rate among individuals with disabilities, which often results from their inability to save money without losing eligibility for government benefits. Prior to the creation of ABLE accounts, individuals with disabilities were often unable to save more than a few thousand dollars without jeopardizing their benefits, which made it difficult for them to achieve financial stability and independence.
ABLE accounts allow individuals with disabilities to save money for expenses related to their disability without affecting their government benefits. This includes expenses such as housing, transportation, education, and health care. In addition, ABLE accounts have tax benefits, including tax-free withdrawals for qualified expenses and the ability to claim a tax credit for contributions to the account.
How To Use ABLE Accounts
ABLE accounts can be used to pay for a wide range of expenses related to the individual’s disability. This includes expenses such as housing, transportation, education, and health care. In addition, ABLE account funds can be used to pay for assistive technology, personal assistance services, and job training.
It is important to note that ABLE account funds can only be used for expenses related to the individual’s disability. If funds are withdrawn for non-qualified expenses, they may be subject to income tax and a 10% penalty.
How To Use ABLE Accounts
- Determine Eligibility: To be eligible for an ABLE account, the individual must have become disabled before the age of 26. In addition, the individual must be receiving Social Security disability benefits or have a qualifying disability determination from the Social Security Administration.
- Choose an ABLE Program: There are several ABLE programs available, each with different fees, investment options, and other features. To choose the best program for your needs, compare the fees, investment options, and other features of each program.
- Open an Account: Once you have chosen an ABLE program, you can open an account by completing an application and providing proof of eligibility.
- Fund the Account: You can fund the account by making contributions from your own funds or from the funds of others, such as family and friends. There is an annual contribution limit of $15,000 for individuals and $30,000 for individuals with working income.
- Manage the Account: Once the account is set up, you can manage it online or by phone. This includes making contributions, investing the funds, and making withdrawals for qualified expenses.
Wrapping Up Things You Need To Know About ABLE Accounts
Links:
Social Security Administration’s website on ABLE accounts: https://www.ssa.gov/pubs/EN-05-10534.pdf
The ABLE National Resource Center: https://www.ablenrc.org/
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- IRS publication on ABLE accounts: https://www.irs.gov/pub/irs-pdf
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