What is an ABLE account?
The Achieving a Better Life Experience (ABLE) Act was enacted on July 1, 2016.
An ABLE account is a state-run savings program that has a tax-advantaged status.
Who Qualifies for an ABLE account?
ABLE accounts can only be established by individuals who have developed a qualifying disability, which is one that allows you to qualify for government assistance, before the age of 26.
As long as the onset of disability occurred prior to turning 26 years old, you would be eligible to establish an ABLE account.
Why Open an ABLE Account?
Those who qualify for an ABLE account are able to contribute up to $15,000 annually, subject to a few exceptions. According to ABLEUnited, who manages ABLE accounts in Florida, the maximum amount allowed in an account is $418,000. Once that limit is reached, money will continue to earn interest, but no more contributions can be made. Another benefit of an ABLE account, is that the first $100,000 that is contributed, is considered an exempt resource when determining eligibility for Medicaid or Supplemental Security Income (SSI).
Similarly to a 529 college savings account, the ABLE Act amends section 529 of the IRS code, which means money in an ABLE account grows tax-free. The assets can also be withdrawn by the individual with a disability or their legal guardian tax-free, if used for qualifying expenses.
One of the main purposes of an ABLE account, is to allow individuals with a disability, the opportunity to help support themselves, gain more independence, and have a positive quality of life. Funds from ABLE account can be accessed by the individual themselves, and can be used for expenses such as:
- legal fees
- medical expenses
- housing expenses
- funeral/burial expenses
- specific therapies
- and more
It is free to enroll in an ABLE account.
Tune in for Part 2, where we discuss the use of ABLE accounts in conjunction with a Special Needs Trust.
If you have questions about ABLE Accounts in Florida, attorney Mark F. Moss can help you understand what options you have available. To arrange a confidential consultation over the phone or in person in Jacksonville, please call 904-329-7242 or inquire online today.
*Disclaimer: Reading this blog post does not create an attorney-client relationship and is not legal advice. This is for informational purposes only. It is best to speak with an attorney about your specific situation, questions, assets, concerns, and needs.