ABLE accounts are accounts created under Section 529A of the Internal Revenue Code with State counterparts, designed for people who became disabled before the age of 26. Finally, New Jersey has adopted its Plan.
A disabled person or their POA or guardian can use the account for any expenses that are incurred as a result of living with a disability and are intended to improve the disabled person’s quality of life, including but not limited to: Education, Health and wellness, Housing, Transportation, Legal fees, Financial management, Employment training and support, Assistive technology, Personal support services, Oversight and monitoring, and Funeral and burial expenses.
ABLE accounts can only be funded on a yearly basis with the gift tax exemption, so it takes a few years to build the account. As long as the account balance is under $100,000, the account is exempt from SSI and Medicaid counting rules. 529s can be rolled into ABLE accounts $15,000 at a time without any penalties. Also, the disabled person’s wages can go into an ABLE account. In some ways, an ABLE account has less restrictive rules, especially relating to housing, than a Special Needs Trust.
Like 529s, the expectation was that each state would run it’s own ABLE Plan. It’s taken a while for New Jersey to get one going, so we had been sending clients to the plans of Ohio and Virginia. Now New Jersey has its own ABLE PLAN. Yay!
ABLE accounts can also work hand in hand with Special Needs Trusts to allow the beneficiary some more autonomy in making their own expenditures. Stakeholders are trying to increase the age of onset of disability so that more people can participate in ABLE accounts. It’s an important tool!
Call us for advice on disability and elder care planning for financial and personal well-being ….. 732-382-6070