Achieving a Better Life Experience (ABLE) accounts are tax-advantaged savings accounts for people who have disabilities and their family members. These accounts are useful to assist people with disabilities pay qualified disability-related expenses without affecting their eligibility for government assistance programs. Distributions are tax-free if used for qualified disability expenses.<\/p>\n
The annual contribution limit is $15,000 in 2021. Certain employed ABLE accounts may make additional contributions up to either the designated beneficiary’s compensation for that tax year or the poverty line for a household of one person. The poverty line for 2021 is $12,880 in the continental US, $16,090 in Alaska, and $14,820 in Hawaii.<\/p>\n
Some designated beneficiaries may be eligible to claim the saver’s credit for a percentage of their contributions. The beneficiary can claim said credit on Form 8880 (linked at the bottom). The saver’s credit is non-refundable and available to individuals who meet the following requirements: at least 18 years of age, not a dependent or a full-time student, and can meet the income requirements.<\/p>\n
Families may rollover funds from a 529 plan to another family member’s ABLE account. Although, the ABLE account must be for the same beneficiary as the 529 account or for a member of the same family as the account holder. Rollovers from a section 529 plan count toward the annual contribution limit.<\/p>\n
States can offer ABLE accounts to help people who become disabled before the age of 26 or their families pay for disability-related expenses. Some expenses may include transportation, housing, and\/or education. These contributions are not deductible for federal tax purposes. Distributions, including earnings, are tax-free to the beneficiary if they are used to pay for qualified disability expenses.<\/p>\n
Form 8880: https:\/\/www.irs.gov\/pub\/irs-dft\/f8880–dft.pdf
\nDistributions From ABLE Accounts and ABLE Account Contribution Information form instructions:
\nhttps:\/\/www.irs.gov\/pub\/irs-pdf\/i1099qa.pdf<\/p>\n","protected":false},"excerpt":{"rendered":"
Achieving a Better Life Experience (ABLE) accounts are tax-advantaged savings accounts for people who have disabilities and their family members. These accounts are useful to assist people with disabilities pay qualified disability-related expenses without affecting their eligibility for government assistance programs. Distributions are tax-free if used for qualified disability expenses. The annual contribution limit is … <\/p>\n