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What Is The ABLE Act? What Does It Do?
The ABLE Act was a piece of legislation passed by Congress in December of 2014. ABLE is an acronym for Achieving Better Life Experience and applies to those with special needs, both minors and adults. Basically, it allows certain people with disabilities to have a special savings account for disability-related expenses without losing their eligibility under SSI, Medicaid and other public benefits.
The Michigan plan is administered through the Michigan Department of Treasury.
Can An Eligible Individual Have More Than One ABLE Account?
No. The law only allows for one, and it depends on how each account is set up. For example, the Michigan Department of Treasury is responsible for setting up the ABLE account, but you’re only eligible to set up one such account.
What Is The ABLE Tax Advantage?
The ABLE tax advantage applies to an individual with special needs or is disabled and specifies that all contributions to that individual’s account will not be taxable. Although it is not tax-deductible for the person who is making the contribution to the account, it’s not taxable to the recipient.
How Much Money Can Be Deposited Into An ABLE Account?
The maximum allowed each year, as of 2016, is $14,000. There is also an aggregate that can be accumulated up to a total of $100,000, which is the maximum allowed over future years. Annually, at present, though, the maximum contribution is $14,000.
How Can An ABLE Account Actually Be Used?
The ABLE account can be used for approximately 10 different categories.
- Education: Funds can be used to assist someone with a disability in furthering their education at the college- or trade-level.
- Housing: This includes housing for a disabled individual trying to live independently.
- Transportation: This could be for a motor vehicle or equipment to assist the individual in so using it.
- Employment training and support.
- Assistive technology and personal support services, such as equipment needed in the home to assist with standing and walking.
- Health and medical services: This would be anything for prevention and wellness.
- Financial management and administrative services: This could include the services of a fiduciary, such as a financial planner, to oversee the individual’s account and ensure that the funds will be available for the future.
- Legal fees, such as expenses for oversight in monitoring the individual’s legal affairs.
- Funeral and burial expenses.
- There is a catch-all category that includes any expenses that may be identified from time to time in the future that could be related to the needs of the disabled individual.