Parents of children with intellectual and developmental disabilities (IDDs) are of course concerned with establishing financial security for their children. This includes provisions for their children after their death. There are a number of financial vehicles for these purposes, such as special needs trusts and Achieving a Better Life Experience (ABLE) accounts. Here’s some basic information about ABLE accounts in case you’re not familiar with them.
Key Things to Know About ABLE Accounts
- ABLE accounts are tax-advantaged savings accounts (interest earned by the account is not taxed) specifically for people with disabilities and their families.
- The beneficiary must have the qualifying disability before the age of 26; however, as long as this is the case, an ABLE account can be established at any time during the individual’s life.
- If a person meets this age requirement and receives SSI and/or SSDI, they automatically qualify for an ABLE account. If they don’t receive either, but meet the age requirement and meet Social Security’s definition and criteria regarding functional limitations, they should be able to qualify with a letter certifying disability from their doctor.
- An individual may only have one ABLE account.
- The beneficiary is the owner of the account. He or she can access the money using a debit card. However, limits can be placed on how much is spent and where it’s spent.
- Anyone can deposit money into an ABLE account for the beneficiary. It must be post-tax money, though, and these deposits are not federally tax deductible (there are some states that consider it tax deductible for the purposes of state taxes; however, that’s obviously not applicable in Florida).
- As of this writing, total annual contributions to an ABLE account are limited to $15,000 in a single tax year.
- Money in an ABLE account can be spent on “qualified disability expenses.” This is a broad term that basically includes any costs associated with living life with a disability. It includes things like food, housing, transportation, healthcare, disability-related support services, assistive technology, education, job training and support, financial management, and more.
- Importantly, the funds in an ABLE account are not considered when determining eligibility for public benefits like SSI, SNAP, and Medicaid, as well as many other aid programs.
- If your state has not established an ABLE program, you may open an account through another state’s program if they accept out-of-state residents. Florida does have an ABLE program. To find out about a different state, or if a particular state accepts out-of-state residents, use the map tool on the ABLE National Resource Center website.
- State ABLE programs typically offer opportunities to invest the money that’s in the account.