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What’s New for ABLE Accounts? Major changes for savings accounts for people with disabilities

Information courtesy of the Office of the Indiana Treasurer of State, the Social Security Administration

Achieving a Better Life Experience (ABLE) Accounts allow people with disabilities to save for their future and pay for disability-related expenses without jeopardizing their access to public benefits. You can open the account for yourself, or an authorized individual can open one on your behalf, if you were diagnosed with a disability before the age of 26, and are either receiving or currently eligible to receive Social Security disability benefits.

This year, there are some major updates to the ABLE Act:

  • Annual Contribution Limit: To adjust for inflation, the annual contribution limit has been raised to $15,000 (previously $14,000) for the 2018 tax year.
  • Saver’s Tax Credit: Account owners who contribute their own money into their ABLE account may now be eligible for the Retirement Savings Contributions Tax Credit (“Saver’s Credit”).
  • ABLE Financial Planning Act: If you are the owner of both an ABLE account and a 529 College Savings account (or a family member is the 529 College Savings account beneficiary, as defined by the law), you may now transfer funds from the 529 College Savings account to your ABLE account without incurring tax or penalty. However, the funds transferred from the 529 College Savings account do count toward your annual contribution limit of $15,000 for the tax year.
  • Increased Contribution Limit for Workers: Account owners who work and earn income will be permitted to make contributions into their ABLE accounts in excess of the $15,000 annual contribution limit under certain circumstances. State ABLE programs are in the process of implementing these changes and will provide updates when they become available.

Learn more about ABLE Accounts at http://indianapop.org/directory/investable.

Doug Schmidt
Director of Communications
The Fifth Freedom Network