The Achieving a Better Life Experience (ABLE) Act of 2014 was developed and implemented as a vehicle to allows states to create tax-advantaged savings programs for certain people who have disabilities which are present before age 26. The ABLE initiative allows for any individual to make annual contributions up to the annual gift-tax amount (currently $15,000) with a maximum allowed balance of $100,000. The earnings and distributions are tax-exempt, provided the funds are used to pay for qualified disability expenses of the designated beneficiary. Some examples of qualified disability expenses include education, housing, transportation, employment training, financial management, and health.
The U.S. Treasury Department and the Internal Revenue Service recently released final regulations providing additional guidance for ABLE programs.
The regulations provide clarification and guidance on several aspects of the program, including:
- Detailed requirements for ABLE programs
- Requirements for establishing and contributing to an ABLE account
- Rules governing changes made to the designated beneficiary of an ABLE account
- Guidelines and limitations for rollovers and transfers from one ABLE account to another
- Guidance related to federal gift and generation-skipping tax consequences with an ABLE account.
For additional details on the specific updates, visit the IRS website.
Since being passed in 2014, the ABLE Act saw more rules proposed in 2015 and 2019 that are now part of the final rules and regulations.
For people managing a disability, the day to day cost of care can be astronomical. The ABLE program may be an appropriate opportunity to minimize the tax liability on money used for that care. If you have questions about this program, or any other elements of estate planning, call me. I would be happy to assist you.
Katherine Liebner is an attorney at Gross Shuman P.C. Ms. Liebner focuses her practice in the areas of estate planning, estate and trust administration, and labor and employment law.
She is admitted to practice before all New York State Courts, Florida State Courts, and the federal district court for the Western District of New York, the Northern District of New York, and the United States Tax Court.
She can be reached at 716.854.4300 ext. 236 or email@example.com