The ABLE Act of 2014 (Achieving a Better Life Experience) creates an account for persons with special needs whose purpose is to provide a tax-free savings account that covers qualified expenses such as education, housing, and transportation. The bill does not replace benefits provided through private insurance, the Medi-Cal program, SSI, the beneficiary’s employment, and other sources. It does not replace the need for and benefits provided by a Special Needs and other types of Trusts used in planning for the beneficiary, which we will discuss. There are specific limitations that must be complied with or government benefits may be jeopardized. The 2018 deposit limit has been increased to $15,000 per year.

Three revisions have been proposed for the ABLE Act. Visit ablernc.org for current status.

1. *Increase age from 26 to 46 to open an account
2. Rollover funds from a 529 plan
3. Increase annual maximum deposit from $14,000 to $26,770 ($11,770 is the current poverty level income) if the person is employed

States with Available Programs for Out of State Residents

*No Debit Card

States with Available Programs for Residents Only

• Florida
• Kentucky
• Vermont
• Missouri

The following is a brief summary of changes already made and those being implemented  over the course of the year.

• Annual Contribution Limit: The annual contribution limit is periodically adjusted for inflation.  As a result, for the 2018 tax year, the annual contribution is set at $15,000 (previously $14,000). 
• Saver’s Tax Credit: ABLE account owners who choose to contribute into their own ABLE account, as opposed to just contributions made by outside contributors, such as friends and family, may now be eligible to take advantage of the Retirement Savings Contributions Tax Credit (otherwise known as the Saver’s Credit). There are additional requirements that must be met in order to qualify for the Saver’s Credit. This is a non-refundable credit.
• ABLE Financial Planning Act: Provided that the beneficiary is the same individual on both accounts (or a family member of the 529 College Savings account beneficiary as defined in the law), it is now allowable to transfer funds in a 529 college savings account to an ABLE account without incurring any tax or penalty.
• The funds rolled over from the 529 college savings account to an ABLE account are subject to the annual contribution limit and thus capped at $15,000 for any given tax year (provided that no other contributions into the account have been made during that tax year).
• ABLE to Work Act: ABLE account owners who have employment may be eligible to contribute above the $15,000 annual contribution limit (possibly up to an additional $12,060 depending on the gross income of the account owner).  The contributions above the $15,000 annual contribution limit would be limited to contributions made specifically by the account owner into their ABLE account.

The ABLE National Resource Center (ANRC) will be closely monitoring these changes to ensure that they are implemented in a manner that provides maximum benefit to individuals with disabilities and their families.  We encourage you to visit the ANRC website (www.ablenrc.org) for further information and updates related to these changes.

The new law is a major victory for military parents of children with special needs because it allows them to provide a survivor benefit and also keep their child qualified for various government benefit programs.

The amendment simply adds a phrase allowing the individual to establish her own first-party special needs trust (“established for the benefit of such individual by the individual, a parent, grandparent, legal guardian of the individual, or a court”). This small change has big consequences. Disabled beneficiaries with mental capacity to establish their own trust no longer need to seek the assistance of their parents, grandparents, guardians, or the court. They may now act on their own behalf to establish a first-party special needs trust and fund it with their own assets, without any undue legal difficulties.