What does ABLE stand for?
Achieving a Better Life Experience.
What is an ABLE account?
An ABLE account is similar to a 529 plan in that funds placed into it are tax advantaged. The funds can be used for qualified disability expenses while preserving the individual’s eligibility for state and Federal benefits.
Who can use an ABLE account?
The beneficiary must be blind or disabled from a condition that began prior to age 26. Thus, individuals who become disabled later in life cannot use ABLE accounts.
How many ABLE accounts can an individual have?
Who can contribute to an ABLE account?
Anyone, including the person with disabilities.
How much can be contributed to an ABLE account?
Up to $14,000 in 2016. The limit is tied to the IRS gift tax exclusion, so the annual contribution limit may increase in the future.
What is the maximum amount that an ABLE account can hold?
$500,000 in Michigan. However, any amount over $100,000 may cause a suspension of the individual’s SSI benefits.
When will ABLE accounts be available in Michigan?
Most likely in the fall of 2016.
What can funds in an ABLE account be spent on?
“Qualified disability expenses” which means housing, transportation, employment training, assistive technology, personal support services, healthcare, legal fees, and funeral and burial expenses.
What happens to the funds in an ABLE account at the individual’s death?
The funds must be repaid to the State of Michigan for reimbursement for Medicaid services.
How does an ABLE account differ from a special needs trust?
Special needs trust have no upper asset limit and no asset contribution limit per year. Expenditures can be made on a broader array of services than an ABLE account, including social outings, sporting events, clothing, and personal electronics.
Although a first party special needs trust also has the requirement that the State of Michigan be repaid at the individual’s death if any funds remain in the trust, a third party special needs trust has no such requirement. Thus, an ABLE account should never be used to hold funds from a third party.