What Is an ABLE Account?

Are you or someone you know living with a disability? Managing finances can be challenging, especially when considering the long-term financial needs for healthcare, housing, and other essential expenses. Luckily, there’s a solution designed to provide financial stability for individuals with disabilities: ABLE accounts.

What is an ABLE Account?

An ABLE account is like a special savings account designed specifically for individuals who have a disability that was identified before they turned 26. It’s also available for parents of children with developmental disabilities. The cool thing about ABLE accounts is that they offer some awesome tax benefits and protection from Medicaid asset seizures.

How Does It Work?

Let’s break it down. You can contribute up to $15,000 a year to an ABLE account, but keep in mind it has to be after-tax money. However, any earnings you make from investing that money are tax-free! Plus, you can access the funds in your account using a debit card.

Why Are ABLE Accounts Important?

Picture this: you’ve got a disability, and you’re dependent on Social Security Income (SSI) or Social Security Disability Insurance (SSDI). But here’s the catch – you’re not allowed to have more than $2,000 in liquid resources. That’s where ABLE accounts swoop in to save the day! They let you save up to $100,000 without worrying about Medicaid seizing your assets.

FAQs About ABLE Accounts

1.Who is eligible for an ABLE account?

To qualify for an ABLE account, you need to have a disability that was identified before you turned 26 and be receiving SSI or SSDI.

2.How much can I save in an ABLE account?

You can contribute up to $15,000 per year, and the maximum account balance allowed varies by state, but it’s usually around $529,000.

3.Can I use the funds for anything?

ABLE account funds can be used for qualified disability expenses, such as healthcare, housing, education, transportation, and more.

Conclusion

ABLE accounts are a game-changer for individuals with disabilities and their families. They provide a way to save and invest money for future needs without risking important benefits like Medicaid. With tax advantages and flexible spending options, ABLE accounts offer a path to financial stability and independence for those who need it most.

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