ABLE Accounts

The Achieving a Better Life Experience (ABLE) Act of 2013 (S. 313/H.R.647) was introduced in the 113th Congress by a bipartisan group of Congressional Champions that included Sens. Robert Casey, Jr. (D-PA) and Richard Burr (R-NC), and Reps. Ander Crenshaw (R-FL), Chris Van Hollen (D-MD), Cathy McMorris Rodgers (R-WA) and Pete Sessions (R-TX). The ABLE Act amends Section 529 of the Internal Revenue Service Code of 1986 to create tax-free savings accounts for individuals with disabilities. The law aims to ease financial strains faced by individuals with disabilities by making tax-free saving accounts available to cover qualified disability expenses.

The ABLE Age Adjustment Act (S.331 and H.R. 1219) was reintroduced in the 117th Congress (2021-2022) on February 23, 2021. It would amend Section 529A of the Internal Revenue Code with respect to qualified ABLE programs by increasing the age of eligibility for an ABLE account from the onset of disability prior to age 26 to an onset of disability prior to age 46.

Although the lifetime contribution limit is higher, SSI only disregards the first $100,000 in an ABLE account.

Facts About ABLE Accounts

• The designated beneficiary of an ABLE account is the eligible individual who owns the ABLE account. He or she must be:
  • eligible for Supplemental Security Income (SSI) based on disability or blindness that began before age 26;
  • entitled to disability insurance benefits (DIB), childhood disability benefits (CDB), or disabled widow’s or widower’s benefits (DWB) based on disability or blindness that began before age 26; or
  • someone who has certified, or whose parent or guardian has certified that he or she met the criteria for a disability certification before age 26.

• An eligible individual may have only one ABLE account.
• A contribution is the deposit of funds into an ABLE account. Any person may contribute to an ABLE account for an eligible beneficiary. Typically, contributions for an ABLE account may not exceed the annual gift tax exemption ($16,000 in 2022; scheduled to be $17,000 in 2023). However, if the beneficiary is working, and they or their employer is not contributing to a retirement plan, they may contribute an additional amount equal to the lesser of their annual gross income or the individual Federal Poverty Level.

• • A distribution is the withdrawal from an ABLE account.  Distributions are only to or for the benefit of the designated beneficiary.
  • A person with signature authority can establish and control an ABLE account for a designated beneficiary who is a minor child or is otherwise incapable of managing the account.
• Qualified disability expenses (QDE) are expenses made for the benefit of the designated beneficiary and related to his or her disability, including, but not limited to:
  • Education;
  • Housing;
  • Transportation;
  • Employment training and support;
  • Assistive technology and related services;
  • Health;
  • Prevention and wellness;
  • Financial management and administrative services;
  • Legal fees;
  • Expenses for ABLE account oversight and monitoring;
  • Funeral and burial; and,
  • Basic living expenses.