On December 19, 2014, President Obama signed into law the Achieving a Better Life
Experience (ABLE) Act. This Act amended Section 529 of the Internal Revenue Code
of 1986 to allow the creation of tax-advantaged savings accounts for individuals with
disabilities. The Act authorized the States to create their own ABLE savings account
WHAT IS AN ABLE ACCOUNT AND HOW DOES IT WORK?
• An ABLE account is funded with post-tax contributions from anyone, including
the individual with disabilities, and are not tax-deductible.
• The disabled individual is the owner of the account and the beneficiary.
• Income earned by the account is not taxed.
• Eligibility is limited to individuals with significant disabilities with an age of
onset of disability prior to turning age 26.
• An eligible individual may have only one ABLE account.
• Currently, the total annual contributions by all participating individuals,
including family and friends, is $14,000 per single tax year (this amount may
be adjusted upward for inflation).
• The first $100,000 of in an ABLE account is exempt from the SSI individual
$2000 resource limit (if the account balance goes over $100,000, the person’s
eligibility for the SSI cash benefit will be suspended. It will have no effect on
their ability to continue receiving medical assistance through Medicaid, unless
the account goes over $418,000, at which time Medicaid eligibility would be
• When the disabled individual dies, the State in which the beneficiary lived can
file a claim against the balance of the account for charges paid by Medicaid
after the date of the creation of the ABLE account, so it is subject to Medicaid
• Distributions out of the account for qualified disability expenses are tax
exempt. A qualified disability expense is an expense to the beneficiary as a
result of living a life with disabilities, and may include education, housing,
transportation, employment training and support, assistive technology,
personal support services, health care expenses, financial management and
administrative services or other expenses which help improve health,
independence or quality of life.
• ABLE accounts within each State will offer different investment strategies
based on risk tolerance and the States will have different set up costs,
account fees and management fees. Florida has seven different investment
options that cover varying degrees of risk.
• You can only change how the investments are managed in your account two
times per year.
• An ABLE account will have lower set up costs, administration fees and
management fees than a Pooled Trust or a Supplemental/Special Needs
• However, a Pooled Trust and SNTs are still viable strategies for planning for
individuals with developmental disabilities. For example, a Third Party Special
Needs Trust in the author’s opinion is still a better planning option than an
ABLE account because: 1) there is no limit on how much you can put into a
Third Party SNT, 2) there is no requirement that distributions out of the SNT be
made for qualified disability expenses, and 3) there is no Medicaid payback
with a Third Party SNT.
As of the date of this blog post, only Florida, Ohio, Nebraska and Tennessee have
set up their ABLE Act Savings Programs.
The Act authorized the States to have discretion in how the programs are set up. So,
some States have ABLE savings programs that are open to individuals who are
residents of another State. Florida is NOT one of those States. Our ABLE savings
program is only open to eligible disabled Florida residents. The Florida ABLE
Savings Program’s website is http://www.ableunited.com/. The Savings program is
administered by Florida’s Prepaid College Board.
Ohio’s STABLE Account Program, Tennessee’s ABLE TN and Nebraska’s Enable
Savings Plan programs are ALL nationwide ABLE savings plans. Thus, no matter of
which State the disabled individual is a resident, an ABLE Savings Account can be
opened on behalf of that person in one of those three States.
Here is a link to a great matrix of the ABLE programs
Here is a link to the ABLE National Resource Center, which provides a lot of
information on ABLE accounts. http://ablenrc.org/
The ABLE Account is a new tool in an expanding toolchest for the special needs