ABLE Accounts
What are ABLE Accounts? ABLE Accounts are special savings accounts that allow people with disabilities to save money without jeopardizing their eligibility for government benefits. This is a new program that was created in December of 2014, and it has already helped many people with disabilities save money for the future. In this blog post, we will discuss the details of the ABLE Account program and how it can benefit you or someone you know.
How ABLE Accounts Work
ABLE accounts are tax-advantaged savings accounts that can be used to cover qualified expenses for individuals with disabilities. The accounts are available to people who became disabled before the age of 26, and they allow contributors to save up to $15,000 per year without affecting their eligibility for means-tested government benefits such as Medicaid. ABLE account funds can be used to cover a wide range of expenses, including housing, transportation, and education. Withdrawals from ABLE accounts are not taxed, and the account balances do not count against the $2,000 limit on assets for Supplemental Security Income (SSI) recipients. For people with disabilities, ABLE accounts offer a unique way to save for their future needs while maintaining their government benefits.
How Much You Can Contribute Each Year
One of the best things about ABLE accounts is that there is no limit on how much you can contribute each year. This means that you can save as much as you want, and your benefits will not be affected. The only catch is that you can only contribute up to $15,000 in a given year. However, this limit is per beneficiary, so if you have more than one ABLE account, you can contribute up to $30,000. This flexibility makes ABLE accounts a great way to save for the future.
Differences by State
Since the inception of the ABLE program, nearly 30 states have created their own ABLE plans. While all of the plans share the same basic structure and features, there are some important differences that savers should be aware of before opening an account.
For starters, not all states offer tax breaks on ABLE contributions. In states that do offer a tax deduction or credit, the amount of the break can vary significantly. For example, Colorado offers a $500 tax credit for contributions to an ABLE account, while Illinois offers a $20 deduction. Additionally, some states impose restrictions on how the money in an ABLE account can be used. For example, Ohio limits account holders to using no more than $10,000 per year for housing expenses. Finally, there are also differences in how much money can be saved in an ABLE account before it affects eligibility for certain government benefits programs. In most states, the limit is set at $100,000, but it is higher in some states and lower in others.
Given these differences, it's important for residents of each state to research their own state's ABLE program before opening an account. By understanding the rules and regulations governing ABLE accounts in their state, savers can be sure that they are getting the most out of this valuable tool.
Choosing an ABLE Account
When it comes to choosing an ABLE account, there are a few things to keep in mind. First, each state has its own rules and regulations regarding ABLE accounts, so be sure to research the requirements in your specific state. Second, consider the fees associated with opening and maintaining an account. These can vary depending on the provider, so it's important to compare fees before making a decision. Finally, think about how you plan to use the account. For example, will you be using it primarily for housing or transportation expenses? Once you've considered all of these factors, you'll be in a good position to choose an ABLE account that meets your needs.
How Many ABLE Programs Are There?
According to the National Down Syndrome Society, there are currently 42 ABLE programs operational in the United States. The programs are run by 26 states and 16 private entities. The ABLE program was created by the federal government in 2014. Its purpose is to help people with disabilities save money without impacting their ability to receive government benefits. The program allows people with disabilities to open tax-advantaged savings accounts. They can use the money in these accounts to cover qualified expenses, such as education, housing, and transportation. So far, over 200,000 people have opened ABLE accounts.
