ABLE to Serve Each and Every ClientSubmitted by Bellwether Wealth on August 16th, 2018
Did you know that 12.8 percent of the population has a disability in the U.S.? That’s a staggering statistic, and with those numbers it’s safe to say that you know at least one person, family member or friend, who is disabled. As wealth managers, we have to understand each and every way we can best serve our clients, and that means understanding new ways for our clients to secure their financial futures for themselves and their families, no matter their situation.
We recently worked on a situation regarding a dependent with a disability, and we directed them toward an ABLE account. ABLE accounts are tax-advantaged savings accounts for those living with disabilities and their families. People who live with a disability rely on a wide variety of public benefits like Social Security and Medicaid, and the ABLE account allows for securing their financial future with a savings account that won’t interfere with their eligibility to access those additional benefits.
A few things to keep track of when thinking about an ABLE account:
- If the account balance ever exceeds $100,000, the amount over $100,000 would count toward the SSI Resource limit of $2,000. So this would have to be monitored.
- Any portion of earnings not used for qualified disability expenses would be subject to taxes and a 10% penalty.
- Here’s a biggie: the ABLE Act places limits on the amount that can be contributed annually as well. The total contributions into the account from all sources cannot exceed $15,000 per calendar year. So it would take several years to get to the $100,000 maximum amount.
- Each eligible person can only have one account.
- If the disabled individual dies with any money left in the account, it is potentially subject to Medicaid payback rules, however, any leftover qualified disability expenses including funeral expenses can be paid first.
- The key benefit is that as long as the money is held in a qualified ABLE account, the $100,000 does not count against the $2,000 maximum resource limit for SSI. The earnings from the plan grow tax-free while invested and are tax-free if withdrawn for qualified disability expenses.
- That would include basic living expenses as well as things like education, housing, transportation, assistive technology, etc.
In the world of money, there are many ins and outs, accounts to help save money, new ways to invest and more ways to spend than ever before, and we’re here to help you understand what is available to you to help you reach your financial goals and secure your future. Contact our office for more information at 402-476-8844 or email email@example.com.