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ABLE Is Ready; Are you Willing?

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Know a “disabled beneficiary?” A new Federal program has been adopted in Georgia for their benefit. It’s like a 529 Plan for disabled individuals.
And we call this to your attention now because contributions to such a plan are limited to $14,000 a year . . . and the end of this year is fast approaching.

The new program –ABLE stands for “Achieving a Better Life Experience” – is designed to help individuals and families save money that can be used to support individuals with disabilities.

The accumulated money can be used for expenses like these for disabled beneficiaries (and this is right out of the US Code):

  • education,
  • housing,
  • transportation,
  • employment training and support,
  • assistive technology and personal support services,
  • health, prevention and wellness,
  • financial management,
  • administrative services,
  • legal fees,
  • expenses for oversight and monitoring, and
  • funeral and burial expenses.

This list will probably be expanded in the future, though it’s certainly pretty broad now. The operating phrase: maintaining or improving the designated beneficiary’s health, independence, and quality of life.

There’s great latitude here.  The IRS Proposed Regulations give an example of a person who has a medically determined mental impairment  limiting her ability to navigate and communicate: “A smart phone would enable “B” to navigate and communicate more safely and effectively, thereby helping her to maintain her independence and to improve her quality of life. Therefore, the expense of buying, using, and maintaining a smart phone that is used by “B” would be considered a qualified disability expense.”

So who can benefit? The guidelines are blessedly vague; they’re not tied to any specific diagnosis. The person, or parent, or guardian setting up the account just has to certify that:

  • The individual has a physical or mental impairment causing marked and severe functional limitations, and which either has lasted (or will probably last) at least 12 continuous months, or which can be expected to result in death; or
  • The individual is blind, per a definition in the Social Security Act;

and in either case the blindness or disability occurred before the date on which the individual attained age 26. But note: the person can be older than 26 now.

A physician also has to give a written diagnosis about the individual’s impairment or impairments, meeting certain criteria.

The money grows like it would it were in a 529 Plan — tax-free. But unlike a 529 Plan, money in the ABLE account can be tapped at any time for a qualified withdrawal, like those expenses listed above.

Even better, what accumulates in a person’s ABLE account does not violate the asset limits of what he or she can have in personal accounts.  Thus, it won’t affect eligibility for Medicaid and Supplemental Social Security benefits.  As the Code states, the ABLE benefits are to “supplement, but not supplant, benefits.”

(There’s a temporary adjustment if an ABLE account balance is more than $100,000, but it’s a long way between the $14,000 you can put in an ABLE account each year, and that $100,000 number — seven years’ worth of gifts, right?)

Now the ABLE accounts are a state-by-state program.  Georgia passed the enabling law this past year, and the Governor signed it into law.  But Georgia doesn’t have the investment mechanism in place yet.

However, like 529s, you can establish an ABLE account for someone in another state.  For example: Ohio will let you open an ABLE account for a non-resident.  Check out www.STABLEaccount.com.

So since the days to make a 2016 contribution are limited, if you know of someone who would be a qualified beneficiary, consider this wonderful, new gift idea.

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