ABLE accounts aim to help disabled individuals fund expenses
The federal government has given states the authority to offer specially designed tax-favored Achieving a Better Life Experience (ABLE) accounts to people with disabilities.

“Recognizing the special financial burdens faced by families raising children with disabilities, ABLE accounts are designed to enable people with disabilities and their families to save for and pay for disability-related expenses,” the Internal Revenue Service said in a news release.

Under the ABLE law, a designated disabled beneficiary’s caretakers may contribute a total amount up to the annual gift tax exclusion amount, which was $14,000 per year as of 2016.

ABLE account distributions are tax-free if they are used to pay qualifying disability expenses, which are defined as expenses that help the disabled person maintain or improve health, independence and quality of life.

The IRS said specific qualifying expenses include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and personal support services expenses, among others.

According to the ABLE National Resource Center, eligible disabled individuals and their families can now establish ABLE accounts that do not have on an impact on their eligibility for SSI, Medicaid and other means-based public benefits. Instead, the center said the accounts are designed to work as a supplement to insurance, Medicaid, SSI, wages and other benefits.

Disabled individuals and their families do not need to wait for their state to pass a law authorizing the use of ABLE accounts. Eligible residents of states who do not establish ABLE accounts for their residents may sign up for an account in any state that allows out-of-state residents to take advantage of their programs.

National ABLE programs that were available as of late January included those established by Alaska, Illinois, Iowa, Kansas, Minnesota, Nevada, North Carolina, Rhode Island, Kentucky, Oregon, Michigan, Tennessee and Ohio, as well as the ABLE for All and ABLE United programs.

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