The ABLE (Achieving a Better Life Experience) Act is bi-partisan federal legislation signed into law in December 2014, creating a new option for some people with disabilities and their families to save for the future while protecting eligibility for public benefits.
ABLE Accounts are: 1) established in the new Section 529A of the tax code; 2) qualified savings accounts that receive preferred federal tax treatment; 3) designed to enable individuals to save for disability related expenses.
Funds in the ABLE Account are disregarded when establishing or maintaining eligibility for federal means-tested programs (the only exception is a Social Security benefit, which would be temporarily suspended when the account exceeds $100,000.
Eligibility to be an ABLE account beneficiary: 1) must be disabled before age 26, and 2) must have been determined to meet the requirements for SSI or Social Security disability benefits.
Each eligible individual is limited to only one ABLE account; the “designated beneficiary” is the account holder.
Account must be established in the designated beneficiary’s state of residence or in a contracting state; total annual contributions may not exceed the federal gift tax limit, currently $14,000.
Multiple individuals may make contributions to the one ABLE account; aggregate contributions may not exceed the state limit for 529 savings accounts.
Distributions from an ABLE account may be used for qualified living expenses, including housing, education, transportation, employment training and support, assistive technology, health, financial management, legal fees.
An account up to $100,000 does not count towards establishing or maintaining eligibility for federal means-tested programs, e.g. Medicaid and SSI.
Withdrawals are tax exempt.
Proposed IRS regulations are a mixed bag; example: a grandparent cannot establish an account in beneficiary’s name
Many more IRS regulations are expected to be promulgated over the next several weeks; States are eagerly awaiting receiving more clarity on how to move forward.
What is Maryland doing to establish an ABLE Program?
SB761, signed into law in May 2015, established the Task Force on the ABLE Program. Task force members were appointed by agencies and the Governor. They represent people with disabilities, advocacy organizations, and financial agencies.
The purpose of the Task Force is to produce a report and proposed legislation to establish an ABLE Program. These will be submitted to the General Assembly for review on December 1, 2015.
The Task Force has begun holding meetings that are open to the public. Information about these meetings can be found at the Maryland Department of Disabilities’ website, mdod.maryland.gov. On the website, you can sign up for the Task Force mailing list, read materials that were shared during meetings, and provide your ideas about the program. You can also contact Anne Blackfield at 410-767-3652 for more information.