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Achieving a Better Life Experience (ABLE) Accounts

Prior to passing the Achieving a Better Life Experience (ABLE) Act of 2014, the IRS tax code provided significant tax benefits to parents who save money for their children’s college education with a 529 Plan. However, parents of children with disabilities had no similar way to use these tax benefits and save for their children’s future needs. The ABLE Act created the 529A Plan, which now allows parents (and other contributors) to contribute money into such plan that provides for the children’s needs, while receiving the tax benefits of a 529 Plan.

The beneficiary of the ABLE Account must be blind or disabled, as per Title II or XVI of the Social Security Act, and such blindness or disability must have occurred before the individuals 26th birthday. The individual is can be named as the beneficiary of only one ABLE Account. Anyone may contribute to the ABLE Account, but the aggregate contributions may not exceed the taxable gift limits of 26 USCA 2503(b), $14,000 as of 2016. Additionally, the maximum amount of the ABLE Account shall not exceed $100,000 unless otherwise permitted by law. (Some states may allow the ABLE Account to exceed $100,000; however, the beneficiary will be suspended from receiving their SSI benefits, until the Account balance is $100,000 or less.) Being named a beneficiary of an ABLE Account will not preclude the individual from receiving Medicaid benefits; however at the beneficiary’s death, the State may seek repayment from the ABLE Account for the cost of care paid by Medicaid.

New York has only recently passed legislation allowing the creation of the ABLE Accounts, and further legislation refining same is still in bill form. While the law permitting ABLE Accounts has been passed, it is still in its infancy and there is presently no program to create such an account in New York.  The New York State Comptroller’s Office anticipates that the earliest these accounts will be available is the end of 2016.

For further information regarding New York’s ABLE Act and the upcoming ABLE Accounts, please do not hesitate to contact Giannasca & Shook PLLC at (914) 872-6000.