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Special Attention to Special Needs “Understanding ABLE Accounts”

Many families with disabled children, young adults and adults, worry about losing government funding due to assets they may own. In 2014 the ABLE Act was created to provide a savings mechanism for individuals with disabilities without losing government benefits. ABLE stands for Achieving a Better Life Experience. ABLE Accounts are a tax advantaged way to save for individuals with disabilities. It also allows these individuals to remain as independent as possible, having their own savings.

ABLE accounts grow tax free. These savings accounts are investment accounts with options similar to a 401(k).

The accounts are administrated on a state level, and certain states may not offer the accounts.

  • South Carolina is in the process of setting up the capability to have ABLE accounts, but have not yet settled on a plan administrator.
    • The South Carolina plan will offer state tax deductions for contributions by state residents.
  • One can enroll in another states plan.
  • When a state plan comes available, one can roll from another state’s plan if they find it beneficial. 

ABLE Accounts are a great tool for individuals with disabilities but with some limitations:

  • Contribution Limit: $14,000 per year.
  • The funds do not affect Social Security Disability or Medicaid.
    • At the owner’s death, there could be Medicaid expenses paid back if there are funds remaining in the account.
  • Accounts with more than $100,000 will suspend SSI benefits (Supplement Security Income), but as soon as the account is under $100,000 the benefit starts again.

 

To open an ABLE account, the individual must meet a few qualifications:

  • Be diagnosed or having symptoms of disability prior to 26 years old.
  • Receiving SSDB or SSI, or having a disability certification from a doctor. The account can only be used for qualified disability expenses, which include education, housing, financial management, etc.

You can learn more about ABLE accounts, ABLE and the different programs they offer on the following links.

Links:

Please contact your advisor with any questions and with help choosing the best state plan for your loved ones.

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Erin works as a paraplanner alongside our Advisors in managing client relationships and special financial planning needs, including retirement transition, education, and estate planning. Erin began working in the financial advisory business upon graduating from the University of Georgia with a BS in Financial Planning in 2015. She competed in the National Financial Planning Student Challenge in 2014. Erin is a member of the Financial Planning Association. She volunteers at Habitat for Humanity as a Financial Assessor.

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