If you or a loved one have special needs, an ABLE account offers a great way to save for future disability-related expenses. In Alabama, an ABLE account is also known as EnAble Savings Plans. ABLE stands for Achieving a Better Life Experience.
The ABLE account offers certain disabled individuals a savings account with earnings that are tax-exempt. Money in the account can be used for disability-related expenses, without affecting your eligibility for means tested government benefits such as SSDI. Typically, to be eligible for means tested benefits, a person can have no more than $2,000 in assets. However, the ABLE account allows you to accumulate up to $100,000 in the account to enhance your quality of life.
Qualified Disability Expenses:
Withdrawals from the account are also tax free if used to pay for qualified disability expenses. Those expenses include:
- Education (including tuition for preschool through post-secondary schools);
- Employment training and support;
- Assistive technology and related services;
- Personal support services;
- Health, prevention and wellness;
- Financial management and administrative services;
- Legal fees;
- Expenses for oversight and monitoring;
- Funeral and burial expenses, and
- Other expenses to enhance the account owner’s quality of life.
How an Able Account Works:
An eligible person or their legal representative opens an ABLE account by completing a form online or mailing a paper enrollment form to the address noted on the form. The initial deposit is $50 unless the owner chooses to use Automated Investment Plan or payroll deduction.
Contributions can be made by:
- Any person or entity may contribute to the account. Additionally, others can contribute up to gift tax exclusion limit ($15,000) “per calendar year per account owner.”
- Payroll deductions
- Automated Investment Plan (“AIP”)
- Note that subsequent contributions must be at least $25 unless AIP or payroll deduction. Also, annual maximum contribution is $15,000.
The disabled person or their legal representative is the owner of the ABLE account. As mentioned, money deposited to the account is tax-exempt, as well as the money withdrawn for eligible expenses. Even the interest earned on the account is tax exempt.
ABLE account owners must be:
- A child, transition-aged youth, or adult with an eligible disability.
- Disabled at the time the account is opened.
- Disabled prior to individual’s 26th birthday.
- Diagnosed with other qualifying conditions as listed at Social Security Administration
- Compassionate Allowances Conditions.
Find Out More About ABLE Accounts.
As with any program, restrictions and limitations apply. If you are interested in setting up an ABLE account for yourself or a loved one, please call us at 256-237-3339 or use our Contact Form to let us know you’re ready to talk.