We all want to save for a rainy day, building a buffer so
that we have the funds to weather adversity in the future. The challenge for
people with Intellectual and developmental disabilities is that saving too much
puts eligibility for Supplemental Social Security Income and access to
Medicaid-funded disability supports at risk.
The Achieving a Better Life Experience Act of 2014 (ABLE
Act) helps address this issue by allowing tax-favored savings and investment
accounts for individuals with disabilities. In October 2020, the Internal
Revenue Service (IRS) released final regulations providing guidance for
“qualified ABLE programs” established by states under the ABLE Act of 2014.
ABLE accounts are designed to help people with disabilities
and their families save and pay for disability-related expenses including:
- Prevention and wellness
- Employment training and support
- Assistive technology
- Personal support services
- Other disability-related expenses
3 Ways New Guidance Makes It Easier to Help Your Loved
- One of the most significant changes in the ABLE
program is that the final regulations broaden the categories of people who may
establish an ABLE account for an eligible beneficiary. Now the ABLE account
beneficiary (your loved one) may designate any person to establish an ABLE
- If your loved one is unable chose another to
establish his or her ABLE account, an agent working under a power of attorney may
do so. If there is no power of attorney, you as the legal guardian, spouse,
parent, sibling, grandparent, conservator or representative payee may establish
the account on your loved one’s behalf.
- Annual deposits to ABLE accounts are capped at
the value of the gift tax exclusion for any given year, currently $15,000
annually. However, under the final rule, people with disabilities who are
employed can deposit their earnings into an ABLE account, above and beyond the
existing contribution cap for the year.
Final regulations are expected to be effective January 1,
2021 but provide for “good faith” transition relief for state ABLE programs.
more about the benefits of ABLE accounts and the specifics that will help you
decide if an ABLE account is right for your loved one.
here to review the IRS final rule.
Because of the many details associated with ABLE
accounts, please consult with your financial advisor to determine the best
course of action for your loved one.