(A weekly series of blog posts that discuss trusts designed to benefit those individuals that are physically, mentally or developmentally incapacitated.)
In 2014, President Obama signed into law, TheAchieving a Better Life Experience (ABLE) Act, which allows the creation of tax-free savings accounts for indiviudals with disabilities. This federal law empowers the states to establish and maintain their own type of ABLE account program. The new laws allow disabled individuals (or their families) to set aside money in accounts known as ABLE accounts. The funds in these accounts can then be used for qualified disability expenses while still keeping the individual eligible for federal public benefits. States, including Pennsylvania, are quickly enacting legislations to roll out their own ABLE account programs before the year’s end. The full extent of this new law is discussed in detail here.
Pending Amendments to The ABLE Act
- The ABLE to Work Act (HR 4795/S 2702) would enable ABLE beneficiaries who work and earn income to save additional funds in their 529A (ABLE) account above the current annual maximum contribution limit ($14,000).
- The ABLE Financial Planning Act (HR 4794/S 2703) will enable ABLE beneficiaries to rollover regular 529 accounts to 529A (ABLE) accounts up to the annual maximum contribution.
- The ABLE Age Adjustment Act (HR 4813/S 2704) will raise the age of onset of disability from 26 to 46.
A handful of states are scheduled to launch their ABLE programs in summer and fall 2016. Early states that plan to launch ABLE programs are: Ohio, Florida, Nebraska, Oregon, Tennessee and Virginia. The original federal ABLE law required individuals to open ABLE accounts in their home state. However, with an amendment to the Act in December 2015 this is no longer the case, and an indiviudal will be able to open an ABLE account in any state that offers the ABLE program.