What is an ABLE account?
By strategizing wisely, you can safeguard your loved one's future without jeopardizing their disability benefits. It's important to know that government programs like SSI, SSDI, and Medicaid have asset limits for eligibility. Discover how an Achieving a Better Life Experience (ABLE) account offers a solution, enabling you to save for your loved one's disability-related expenses while preserving their benefits.
What Exactly is an ABLE Account?
An ABLE account is a special savings program that offers tax benefits. It is specifically created to assist individuals with disabilities and their families in saving money for disability-related expenses.
The account aims to provide financial support for disability-related costs. After creating an account, anyone can make contributions, including friends, family members, or the account holder. Notably, utilizing funds for qualified disability expenses exempts withdrawals from federal income tax, inclusive of any accrued earnings.
How do ABLE Accounts affect benefits?
Numerous individuals rely on government disability programs and benefits to cover income, healthcare, and essential living expenses. Here's a useful insight:
Money held in ABLE accounts doesn't influence Medicaid benefits.
SSI benefits remain unaffected as long as the ABLE account balance stays below $100,000.
Who Qualifies for an ABLE Account?
Your loved one can have an ABLE account if they meet any of these conditions, being the designated or account beneficiary.
They're currently receiving benefits under SSI or SSDI.
They meet the eligibility criteria for SSI due to a disability or blindness that commenced before turning 26.
They may be eligible for disability benefits if they became disabled or blind before turning 26. This includes disability insurance benefits, childhood disability benefits, and benefits for disabled widows or widowers.
They've been certified to have met the disability criteria before reaching 26 years of age.
What's the Maximum Contribution for an ABLE Account?
In 2024, you can contribute up to $18,000 per year. You can receive this money from any source, such as family, friends, or transferring funds from a 529 account.
If the beneficiary has a job and earns money, they can add more than the yearly limit to their ABLE account. This means they can save even more for their future expenses. It's a great opportunity for them to secure their financial future. For further insights, explore the "Spotlight on Achieving a Better Life Experience (ABLE) accounts" on ssa.gov.
What Types of Expenses Qualify as Disability-Related?
These costs are connected to improving your family member's health, freedom, or overall happiness because of their disability. Examples encompass:
Educational expenses
Transportation costs
Legal fees
Housing expenditures
Assistive technologies and services
Healthcare expenses
For a thorough compilation of qualified disability expenses, refer to Achieving a Better Life Experience (ABLE) Accounts. Additionally, maintaining meticulous records of withdrawals is advisable in case the IRS seeks confirmation regarding the funds' utilization.
Bottom Line
More people are learning about these accounts. Laws are being expanded to include them. This will have a bigger impact on helping individuals with disabilities become more financially included and empowered nationwide. Using ABLE accounts can help improve financial stability and promote equality for everyone in our society.
Sources:
https://www.fidelity.com/learning-center/life-events/what-is-an-able-account
Disclosures:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
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