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ABLE Act Accounts for Disabled Individuals

November 13, 2015

On December 19, 2014, the Achieving a Better Life Experience (ABLE) Act of 2013 was passed. The ABLE Act amends Section 529 of the Internal Revenue Service Code to create tax-free savings accounts for individuals with disabilities in order to cover qualified disability expenses such as education, housing, and transportation.  New York State also recognizes ABLE Act 529A Accounts.

Eligible individuals and families will be allowed to establish an ABLE Act 529A account that will not affect an individual’s eligibility for SSI, Medicaid, and other public benefits.  If an individual has significant disabilities, with onset of disability before 26 years of age, and is already receiving benefits under SSI and/or SSDI, the individual is automatically eligible to establish an ABLE Act 529A account.

An individual beneficiary may have only one (1) 529A account, and it must be established in the state where the beneficiary lives.

Each year, up to $14,000 may be contributed to the 529A account (with future adjustments for inflation).  For individuals with disabilities who are recipients of SSI and Medicaid, the first $100,000 in the 529A account will be exempted from the SSI $2,000 individual resource limit. If an ABLE 529A account exceeds $100,000, the beneficiary will be suspended from eligibility for SSI benefits and no longer receive that monthly income; however, the beneficiary will continue to be eligible for Medicaid benefits.

A qualified disability expense is an expense related to the designated beneficiary as a result of living a life with a disability. These include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management, and administrative services.

An ABLE 529A account can provide more choice and control for the beneficiary and family. The cost of establishing a 529A account will be less than either a Special Needs Trust or Pooled Income Trust. For many families, the ABLE account will be a significant and viable option in addition to a Trust program.

If you have any questions about the above material or wish to speak to an attorney, please contact HoganWillig, Attorneys at Law at 716-636-7600 or visit HoganWillig’s main office is located at 2410 North Forest Road in Amherst, New York with additional offices in Lockport, Lancaster, and Buffalo.