April 8, 2019
When is it time to open an ABLE account?
Many people are surprised that ABLE savings accounts can be opened at any time. ABLE savings, up to $100,000, does not impact eligibility for Supplemental Security Income (SSI). Also, funds in an ABLE account do not affect Medicaid, and a parent or guardian can open an ABLE account for a child born with a significant disability, allowing for greater savings over time.
In the past, parents, case managers and individuals with disabilities would monitor savings levels, with an eye towards spending down funds, to maintain eligibility for means-tested benefits. For ABLE-eligible individuals, spending down can now be replaced with opportunities to save within ABLE for long-term goals. Many people are even opening ABLE accounts to ensure financial stability for retirement.
Are you on track to maximize your ABLE contributions in 2019? The following are questions to consider:
- Have I reached my ABLE contribution limit of $15,000 in 2019?
- If I work and do not have an employer-sponsored retirement account, how much can I regularly deposit from my earnings directly into ABLE to reach the maximum of $12,140 from my earnings for 2019? (Residents of Alaska $15,180 and Hawaii $13,960)
- Can I invite family and friends to contribute to ABLE for the holidays, special occasions or towards a specific savings goal or a one-time, big-ticket purchase?
- Is my employer be interested in contributing to my ABLE account since I do not participate in the employer matched retirement account?
The following are questions to consider when figuring out when, how and on what QDEs ABLE funds should be used to pay for this year:
- Should I buy an item that could count as an impairment-related work expense (IRWE) under SSI and Social Security Disability Insurance (SSDI) now, or wait?
- Is it best to pay for medical expenses before the end of the calendar year?
- If I work and have a tax liability, should I purchase something now that will qualify as a tax deduction or credit to lower my tax bill? See: https://www.irs.gov/publications/p907
- Have I explored all other options which may pay for an item or service that I need when I am deciding whether to use my ABLE contributions? For example, it is important to apply for college financial aid through FAFSA and to apply with Vocational Rehabilitation for Assistive Technology needed for employment before paying for items from ABLE.
Have you had a conversation about ABLE accounts and how they can help individuals who have had a significant disability onset prior to age 26? Family members, friends or an extended circle of support may appreciate the chance to provide financial assistance or designate an inheritance to an individual with a disability. For many, the need to open an ABLE account, a Special Needs Trust (SNT) or a Pooled Trust is important to ensuring retention of benefits and ease of access to funds for future qualified disability expenses (QDE), including housing expenses. All ABLE accounts are opened online, averaging less than 10 minutes to complete the process. Review the Road Map to Enrollment to learn more about the enrollment process.