Contribution Limit to ABLE Accounts Receives Increase
What is an ABLE Account?
24 years after the Americans with Disabilities Act (ADA) was passed in 1990, Congress passed the Stephen Beck Jr., Achieving a Better Life Experience Act, also known as the ABLE Act. The passing of this act was a big relief for many in the disabled community as it meant recognition of the cost of living that is associated with their disability. Prior to the passing of the ABLE act, the matter of receiving public benefits while building up financial security was nearly impossible and therefore was a major root cause for individual and family financial struggles. An individual holding $2,000 or more worth of resources or assets became an indicator for whether or not they would be eligible to receive access to publicly funded programs.
The outcome of the ABLE act was the creation of a tax advantaged savings account, meaning that the income earned from these accounts will not be taxed. Up to $100,000 can be saved in an ABLE account which allows individuals and their families to save and invest for qualified disability expenses. Qualified expenses do not have to be medical related and may also encompass housing, education, legal services, job training, transportation, ect. Eligible individuals may have an ABLE account without worry that it will affect their eligibility or continuation of public benefits such as Supplemental Nutrition Assistance Program (SNAP), Social Security Disability Insurance (SSDI), Social Security Income (SSI), and Medicaid.
What is the significance of the IRS raising the limit for ABLE accounts?
A recent change in tax rules for 2023 has increased the federal gift tax inclusion from $16,000 to $17,000, and because the annual deposit limit for ABLE accounts are based on this metric, they were affected by this increase as well. This means that total annual contributions into the ABLE account must not exceed $17,000. Contributions into the ABLE account can be made by friends or family. This increase allows individuals with ABLE accounts to save even more money without the risk of losing benefits. Employed individuals with a disability are also able to save some of their earnings in addition to any contributions made from families or friends, so long as total annual contributions remain below $17,000.
There are currently 45 states that have the ABLE program and many of these states allow nationwide enrollment. Eligible individuals may choose to enroll into their preferred state program given that particular state is accepting out-of-state residents.
This increase, though not a big one, improves the quality of lives of LSA residents and our loved ones with I/DD.
Take a look at the Roadmap to Enrollment here http://ablenrc.wpengine.com/get-started/
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