What is the ABLE Act?
Signed into law in December 2014, the Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act authorized states to establish tax-advantaged savings programs for individuals with a disabilities co authored by Senator Bob Casey of Pennsylvania. The ABLE Act is considered the most significant federal legislation addressing the needs of persons with disabilities since the Americans with Disabilities Act passed more than 25 years ago.
What is an ABLE account?
ABLE accounts are tax-advantaged savings accounts for eligible individuals with disabilities. For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability. ABLE accounts allow Eligible Individuals the opportunity to save and fund a variety of Qualified Disability Expenses without endangering eligibility for certain benefits that are critical to their health and well-being, such as Medicaid and Supplemental Security Income (SSI).
Why the need for ABLE accounts?
Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care, food and housing assistance. Many of these benefits require meeting a means or resource test that limits the eligibility of individuals who report more than $2,000 in cash savings, retirement funds and other items of significant value.
Nevada Treasurer Zach Conine’s office has taken a great lead to help Nevadans recognizing the opportunity for ABLE. On December 19, 2014, the ABLE Act was passed by a majority in Congress while the Nevada Legislature passed SB 419 to authorize the State Treasurer’s Office to implement the Nevada’s ABLE Program. The Aging and Disability Services Division will be responsible for education and outreach.
Contact Information for Nevada ABLE
Monday through Friday, 8:00 a.m. to 5:00 p.m. Pacific Time
Able Website: nv.savewithable.com
What is “529A?”
The ABLE Act created Section 529A of the Internal Revenue Code. This is the federal legal framework that establishes the specific rules and requirements of an ABLE account.
Contribution cannot exceed $15,000 per year, a rule that remains the same in 2019. However, the IRS has made a few updates to its rules regarding how people may contribute to ABLE accounts. Below is a breakdown of what’s new.
Changes to ABLE Accounts in 2019
Contributions may now include any contributions from a section 529 program and count toward the $15,000 limit. This new rule is beneficial to families who have a 529 savings plan but would like to use those funds for other expenses.
Employed disabled individuals can contribute their income and wages into their ABLE account up to $12,140 each year, as long as they do not have a retirement plan available to which their employer would contribute.
Contributions to an ABLE account are included in the IRS’s Saver Credit. For low-income to moderate-income earners, contributions to an ABLE account may qualify individuals for a tax credit of up to $2,000.
By law, all distributions from an ABLE account must be used exclusively for qualified expenses like higher education, a primary residence, transportation, employment costs, and other appropriate health and wellness expenditures. Each state has its own rules regarding ABLE accounts, such as:
Whether it offers enrollment to out of state residents,
The initial minimum contribution requirement to open an ABLE account,
Fees or restrictions to the number of disbursement you are allowed, and much more.