ABLE Accounts are designed for individuals with disabilities to assist them in saving money and accumulating a savings account without jeopardizing their access to government benefits. Achieving a Better Life Experience (ABLE) accounts have been around for a few years. Accounts holding up to $100,000 maintain eligibility for Supplemental Security Income, and Medicaid eligibility is never effected.
The funding limits for ABLE accounts have remained consistent with the Federal gift tax exclusion, which is currently $15,000. The IRS has rolled out a new expansion of the ABLE accounts and the ability to adapt with families’ growing needs. Now individuals with disabilities who are employed can also contribute their income and wages into an ABLE account up to $12,140 per year for those in the continental U.S. provided they do not have a employer-contributed workplace retirement plan available.
Another big update to the ABLE accounts is the flexibility to support funds that were previously kept in a qualified tuition program or 529 account. This is a major win for those who began saving for their children in a 529 account but may need to utilize those funds for a wider array of services. Now they can rollover the qualified tuition fund into a more flexible ABLE account at $15,000 each year.
The last update beneficial to those with ABLE accounts is the inclusion of these contributions in the Saver Credit. For low to moderate income workers, the contributions made to the ABLE accounts can qualify for a tax credit of up to $2,000.