May 13, 2019
How do I open an ABLE account?
All ABLE accounts are opened online, averaging less than 10 minutes. The Road Map to Enrollment walks people through the process. The state comparison tool can also be helpful when deciding which plan to open. If you live in a state that is offering state tax deductions or credit for contributions, it would be to your advantage to select your state’s ABLE plan. If you want easy access to your savings, you may want to select a plan with a debit card or checking option. You may want to compare fees as well. Once you select a state ABLE plan, simply click on the program name within the state comparison tool, and you will be directed to the state plan to open the account. Write down the name of the plan, their contact number and your account number to reach them in the future.
One ABLE account may be opened in the person’s name who has the qualifying disability. The ABLE account owner, their parent or a guardian are allowed to open an ABLE account. A person who has a representative payee is allowed to own an ABLE account. ABLE account owners are encouraged to learn skills around earning money, saving, managing their spending and investing within their ABLE account, with the support of family and friends within their circle of support.
What is a Qualified Disability Expense (QDE)?
A person who receives Supplemental Security Income (SSI) must use their SSI to pay for housing and food. An SSI beneficiary may use ABLE funds to help pay for additional housing expenses. Housing expenses include rent, mortgage, property taxes, utilities, maintenance and modifications.
A vacation designed specifically for a person with a disability, personal assistant expenses or a camp program for people with disabilities are QDEs. If a physician or an Individual Education Plan (IEP) orders a specific program, vacation or therapy, that would also qualify a QDE. Expenses that are not QDEs, such as gifts for others, a vacation or gambling may be purchased with funds not saved within ABLE. The webinar, Qualified Disability Expenses, provides more information about QDEs.
People who have an ABLE account may receive an Internal Revenue Service (IRS) form (1099-QA) for reporting distributions from their ABLE account, or an ABLE program may send you a form (5498-QA) for reporting your ABLE contributions. Keep receipts of your QDE purchases for the calendar year and hold with the forms for three tax filing seasons, in case the IRS conducts an audit. ABLE account owners are not required to file income taxes simply because they own an ABLE account.
How does ABLE work with SSI and SSDI?
ABLE account savings up to $100,000 does not affect SSI eligibility. Social Security Disability Insurance (SSDI) does not have a resource or savings limit, therefore an SSDI beneficiary can save as much as the state ABLE plan allows. Any amount of ABLE savings does not change eligibility for any type of Medicaid. Therefore, many families with more than one young child with a significant disability are opening one ABLE account for each qualified individual. Youth who are starting their first job, or who are age 18, are opening ABLE accounts to exclude their savings, within ABLE, when applying for disability benefits.
People with disabilities who work, or who are unable to work, are opening ABLE accounts to protect their savings. Many seniors who had a significant disability onset, prior to age 26, are also opening ABLE accounts as a retirement savings option. Often, family members contribute or designate inheritance up to $15,000 to the ABLE account. Some people are establishing a Special Needs Trust (SNT), allowing for contributions into ABLE. An ABLE account can be opened at any age. The sooner an account is opened, the more money can be saved over time. State ABLE programs allow from $100,000 – $529,000 to be saved within their plans, and investment options allow the savings to grow tax-free.