If you don’t know and need help from Social Security for your disabilities, this could be an important article for you to read. The Achieving a Better Life Experience Act of 2014 or ABLE allows states to set up tax-advantaged programs for eligible people with disabilities. Funds from 529A ABLE accounts can help those with disabilities pay for qualified disability expenses. Getting benefits from the Social Security Administration can be a challenge for those with disabilities to help improve their circumstances because of the $2,000 resource limit. The limit means someone receiving payments from SSDI or Social Security Disability Insurance cannot have a bank account or other funds that are over $2,000 without losing a portion of their benefits.
People with savings accounts that are $2,000 or less have a difficult time if they want to move into a new home, purchase a vehicle, further their education, or even get into programs to help improve their disabilities through important exercise programs.
The government is providing a way for people with disabilities to get beyond barriers and save money.
The Stephen Beck Jr Achieving a Better Life Experience (ABLE) Act of 2014 allows people to save up to $15,000 annually without losing their benefits. ABLE has been modeled after college savings plans. The savings or investment account goes past the SSI resource limit and can grow interest tax-free.
Some ABLE Act restrictions you should know:
- Your account may not receive more than $15,000 each year.
- If the account balance goes over $100,000, Social Security benefits will be
affected.
Most accounts do have a total lifetime balance limit of $500,000.
Money in an ABLE account cannot be spent on just anything. In general, the account funds must be used to pay for expenses that may help improve your independence or quality of life.
What options qualify:
- Housing
- Education
- transportation
- Health and wellness
- Personal assistance
- Assistive technology
- Employment training and support
Savings placed in an ABLE account is insured by the FDIC or Federal Deposit Insurance Corporation. The chosen percentage of funds in the account may be allocated as uninsured investment money. The account holder is at liberty to choose a risk factor that is a low, medium, or high investment strategy.
Low-risk is the safest conservative option with the lowest possibility for return. A high-risk could make more money but also lose money whereas a medium-risk investment will land somewhere in the middle. Based on the account holder’s choice, the money is automatically allocated into more combinations of stocks, bonds, and mutual funds.
As an individual, you might want to think about the options and consider how long the money will be in the market and risk tolerance. ABLE warns that invested money is not insured and that money, as well as the principle, may be lost over the course of the investment period.
Although the program was enacted federally, ABLE is a state-run program. Washington’s program opened for enrollment in July of 2018. To date, enrollments have been low with the State Department of Commerce reporting only a few hundred people have opened an account. Commerce estimates approximately 30,000 to 50,000 people in Washington are eligible for the ABLE Savings Plan and have the assets to open an account.
The Columbian newspaper in Vancouver just recently included an article about ABLE and quoted Peter Tassoni, the commerce disability workgroup manager, saying he hopes they have a higher enrollment rate. He believed there would be more backing from people wanting to join the program.
41 states and DC have ABLE Savings Plans. Oregon’s plan has been a year and a half ahead of Washington’s so some people in Washington signed up early through that option or the national ABLE For All Savings Plan.
People can shop around for the best program to meet their needs while some states accept clients from all 50 states including Tennessee, Virginia, Ohio, and Nebraska. Virginia is one of a few states that are offering a debit card for the account. The ABLE National Resource Center offers a tool for reviewing the different state programs to find the best match for you.
The account holder, along with family and friends can deposit funds into the account using post-taxed dollars. Contributions are not federally tax-deductible but some states may allow for state income tax deductions for contributions made to an ABLE account.
One good way to apply for an account is to type into your browser “Open an ABLE account”. If you type in the name of the state, you will find links to take you directly to the program. Washington’s ABLE Savings Plan links directly to a clickable form to find your eligibility.
What are the annual and lifetime contribution limits for ABLE accounts?
Individuals can contribute up to $15,000 annually to an ABLE account. The total lifetime balance of the account is limited to $500,000.
What expenses can ABLE account funds be used for?
ABLE account funds must be used for qualified disability expenses that improve the account holder's independence or quality of life. These can include housing, education, transportation, health and wellness, and other related expenses.
Are contributions to ABLE accounts tax-deductible?
Contributions to ABLE accounts are made with after-tax dollars and are not federally tax-deductible. However, some states may offer state income tax deductions for contributions made to an ABLE account.
How are ABLE account funds invested, and what are the risk options?
ABLE account funds can be allocated into various investment options, including stocks, bonds, and mutual funds. Account holders can choose from low-risk, medium-risk, or high-risk investment strategies based on their risk tolerance and investment timeline. Low-risk options are the safest but offer the lowest potential returns, while high-risk options have the potential for higher returns but also come with a higher risk of loss.
Is the money in an ABLE account insured?
The savings portion of an ABLE account is insured by the FDIC (Federal Deposit Insurance Corporation). However, the investment portion of the account is not insured, and the account holder bears the risk of potential losses.
How many states offer ABLE Savings Plans, and can I open an account in any state?
Currently, 41 states and the District of Columbia offer ABLE Savings Plans. Some states, such as Tennessee, Virginia, Ohio, and Nebraska, accept clients from all 50 states. You can shop around to find the best program that meets your needs.
How can I apply for an ABLE account?
To apply for an ABLE account, you can search online for "Open an ABLE account" along with the name of your state. This will direct you to the specific state program's website, where you can find eligibility information and application forms. For example, Washington's ABLE Savings Plan has a clickable form to determine your eligibility.
What is the enrollment status of ABLE Savings Plans?
While the ABLE program is federally enacted, it is run at the state level. Enrollment rates vary by state. For example, Washington's program, which opened in July 2018, has had relatively low enrollment, with only a few hundred people opening accounts. However, it is estimated that 30,000 to 50,000 people in Washington are eligible for the program.
Are there any additional resources available to help me choose the right ABLE Savings Plan?
The ABLE National Resource Center offers a tool to help you review and compare different state programs to find the best match for your needs. Some states, like Virginia, also offer additional features such as debit cards for easier access to account funds.