An important Resolve passed in the last legislative session was LD 1421: An Act to Establish a Tax-Free Savings Program for Individuals with Disabilities known as the ABLE ACT federally. It directed the State Treasurer to review the experience of other states in implementing tax-advantaged qualified savings programs for qualified individuals with disabilities and report the results of the Treasurer of State's research and recommendations to the joint standing committee of the Legislature having jurisdiction over taxation matters by January 15, 2017. ASM has been actively engaged with the State Treasurer following the progress on the ABLE Act and the report will be submitted the second week of January. ASM will continue to monitor and support the enactment of the ABLE legislation. This is the ABLE Act information sheet prepared by the Maine State Treasurer; October 2016:
A Better Life Experience (ABLE) Accounts – 529A
If you have a disability, recognized by the Social Security Administration, and your disability began before you turned 26, you are eligible to open an ABLE account. An ABLE account is a financial account that can help you:
- Build assets in an account that has tax advantages. Your investments in an ABLE account won’t be taxed.
- Save up money without losing benefits. Many benefits programs have resource limits but:
- You can have up to $100,000 in your ABLE account and keep getting Supplemental Security Income (SSI) benefits, as long as you meet all other SSI rules. If you go over $100,000, SSI benefits will stop, but they will start up again if your ABLE account drops back below $100,000 and you won't have to reapply.
- Save up to $14,000 annually. An ABLE account has an annual limit on how much you and anybody else combined can deposit. The limit is $14,000 in 2016.
- Use money for qualifying expenses. The money in an ABLE account has to be used for certain qualifying expenses, like daily living expenses, education, housing, transportation, help getting and keeping work, health care, legal fees, financial management fees, and other expenses
Things to keep in mind when opening an ABLE Account:
- Accounts are state sponsored. You can only open an account through a state-designated program or institution.
- One account only. You can only open one ABLE account. (You cannot open accounts in more than one state.)
- Programs are flexible. You can choose to open an account in another state’s ABLE program.
Does your disability qualify?
To open an ABLE account, you must have a disability that began before you turned 26 and that meets Social Security’s standards for adults. (SSA’s standards for blindness are different.)
You definitely qualify for an ABLE account if you get benefits like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), and Childhood Disability Benefits, because they all use SSA's disability standards.
If you don’t get disability-based benefits, you can “self-certify” that your disability meets SSA’s standards. For self-certification, you must have documentation verified by a doctor that shows your disability meets SSA standards with one difference: instead of limiting your earnings, you must show that your disability causes "marked and severe functional limitations." Roughly speaking, that means your disability must be on Social Security’s List of Impairments or be at least as severe as an impairment on that list. Conditions on Social Security's list of Compassionate Allowances Conditions also usually qualify. Keep your disability documentation in a safe place, because the Internal Revenue Service (IRS) might ask to see it.