February 7, 2017 by Admin
What is this ABLE account I keep hearing about?
I keep hearing about the ABLE account so I wanted to do some research and share what I’ve learned about it.
U.S. citizens, or legal residents, who had a disability before their 26th birthday. The account can be opened at any age. Parents can open the account for their children, but the person with a disability must be the account owner.
WHICH STATES OFFER ABLE ACCOUNTS?
16 states so far! Alaska, Florida, Illinois, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, North Carolina, Ohio, Oregon, Rhode Island, Tennessee and Virginia. About 10 more states are expected to launch accounts in 2017.
WHERE CAN I FIND OUT MORE INFO ABOUT MY STATE?
The ABLE National Resource Center’s website, ablenrc.org, keeps track of the states that offer a plan.
DO I NEED TO LIVE IN A CERTAIN STATE?
No! Many of the state accounts are open to non-residents of the state. However, some states offer special tax benefits for residents. If you open an ABLE account at one state, you can switch it to another state’s plan.
HOW DO I SIGN UP?
You can sign up online, each state has a website and each state has a different name for their plans. Virginia’s plan is called ABLEnow .
HOW MUCH CAN I SAVE?
You can save $14,000 a year, and friends and family all can contribute! Those that have more than $100,000 in the account will lose Supplemental Security Income payments until the account goes below that amount. States typically limit the amount that can be saved at about $300,000.
WHAT CAN THE MONEY BE SPENT ON?
Any expenses that improve the life, independence or health of the person with disabilities. That can mean rent payments, school tuition, medical expenses and other costs.
WHAT ARE THE TAX BENEFITS?
Earnings grow without being taxed. Some states offer tax benefits to residents.
ARE THERE FEES?
Yes. You’ll need to check with each plan, as fees differ from state to state. Some have maintenance fees of $15 every three months, or $60 a year. Plus, there are fees — usually a small percentage — if the money is invested in an index fund. The ABLE National Resource Center’s website has a tool that can help you compare each state’s account offering at ablenrc.org/state_compare .
WHAT HAPPENS IF THE ACCOUNT HOLDER DIES?
The state can claim any leftover money as payback for care paid by Medicaid after the ABLE account was opened.
- With ABLE accounts, money saved can be used to buy anything that helps the life of the person with a disability, such as rent payments, school tuition or groceries.
- ABLE accounts, they let people with disabilities and their families save up to $14,000 a year without losing benefits. The accounts, which were made possible by a law signed two years ago, are operated by individual states and are similar to 529 college savings plans.
- To qualify for an ABLE account, the account owner must have had a disability before their 26th birthday.
- Medicaid health benefits are never affected, no matter how much money is saved.
- Money can be invested in index funds and earnings are not taxed.
Here is a helpful Introduction video about the ABLEnow account:
More information can be found here: