Tax Reform Allows Disabled Persons to Save More Money in ABLE Accounts by Jack Winter, CPA/PFS, CFP

Posted on August 29, 2018 by Jack Winter

The Tax Cuts and Jobs Act includes a provision that allows people with disabilities to put more money into their Achieving a Better Life Experience (ABLE) accounts and qualify for a Saver’s Credit that is available to low- and moderate-income workers.

The U.S. government introduced ABLE accounts in 2015 to help disabled individuals and their families save money to pay for disability-related expenses without any risk of losing public assistance, in the form of Medicaid and Supplemental Security Income. While contributions made to these accounts are not deductible, the distributions and earnings paid to beneficiaries are tax-free when used to pay for housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology and other disability-related expenses.

Beginning in 2018, individuals may contribute up to $15,000 for the year into an ABLE account for a disabled beneficiary, who, for the first time, may also contribute to the account a portion or all of the money he or she earns from employment. The maximum amount working beneficiaries may contribute is limited to the poverty line amount for a single person household. For 2018, this amount is $12,140 for qualifying beneficiaries who live in the continental U.S., $13,960 in Hawaii and $15,180 in Alaska. However, beneficiaries will not be eligible to make these additional contributions to their ABLE account when their employers contribute to workplace 401(k) retirement plans on behalf of the disabled beneficiaries.

When qualifying beneficiaries do contribute to their ABLE accounts starting in 2018, they may also be eligible to receive up to $2,000 in the form of a Saver’s Credit. Under the Tax Code, individuals may use credits to reduce the amount of tax they owe or increase the refund that they can expect to receive back from the government in a given year. If beneficiaries do not work, they may still maximize their savings by rolling over into their ABLE accounts any money they have in their own 529 qualified tuition savings plan or that of another family member.

With the recent changes to the tax laws, individuals with disabilities and their family members should seek the counsel of experienced advisors to ensure they are maximizing savings and tax efficiency under the new regime.

About the Author: Jack Winter, CPA/PFS, CFP, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he provides estate planning, tax structuring and business advisory services to individuals, families and business owners. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or via email at