Most of us realize that personal savings are important for our financial stability. Along with traditional bank and investment accounts, there are also some specialized opportunities to save and invest and one example is the ABLE account. Suzanne Himes, lead financial planner at Asset Planning Corporation, is here to help explain how ABLE accounts work and who can benefit from them.
SUZANNE, ABLE ACCOUNTS ARE NOT VERY WELL KNOWN, ARE THEY?
- ABLE accounts were created just five years ago by the ABLE Act and these are tax-free savings accounts specifically for individuals with disabilities.
- Purpose is to ease financial strains by making savings accounts available to supplement other benefits.
- Funds can be used for qualified disability-related expenses
- Employment training and support
- Health care
- Assistive technology
- Other personal support services
WHO IS ELIGIBLE TO HAVE AN ABLE SAVINGS ACCOUNT?
- Key to eligibility – Account owner must have a disabling condition that occurred before age 26
- If you meet this test and are also already receiving benefits under SSI and/or SSDI, you are automatically eligible to open an ABLE account.
- Can also qualify for account even if not receiving those other benefits, with doctor certification.
HOW DO THESE ACCOUNTS WORK?
- Can only have one ABLE account, but can transfer from one state’s program to another; over 40 ABLE state program options currently.
- Anyone can contribute to the account, not just the owner (ex: family, friends, an employer); funds can also be rolled over from a 529 college savings account.
- Total annual contributions up to $15,000 per year; plus additional amounts if working but not participating in an employer retirement plan.
- Account balances up to $100,000 will not impact eligibility for federal means-tested benefits such as Supplemental Security Income or Medicaid.
FOR MORE INFORMATION ON ABLE SAVINGS ACCOUNTS:
- ABLE National Resource Center – www.ablenrc.org
- ABLE Tennessee – www.abletn.gov
Want to learn more about ABLE Accounts? Do you have other general questions about financial planning or investing? Send your questions to our Knoxville Certified financial planners or directly to firstname.lastname@example.org!