The IRS has proposed a rule issued on Friday, June 19, 2015, with guidelines for the “Achieving a Better Life Experience (ABLE) Act”. The ABLE act was designed for people who became disabled before the age of 26, to enable them and their families to save and pay for disability related expenses. Here are some key notes you may want to know:
- Account owner and designated beneficiary of the account is the disabled individual.
- Must have been disabled before 26th birthday.
- Can have only one ABLE account at a time.
- Currently, $14,000 (adjusted annually) can be contributed to an ABLE account on an annual basis, and the distributions are TAX-FREE if used to pay qualified disability expenses.
Qualified disability expenses are expenses that relate to the designated beneficiary’s disability and help that person maintain or improve health, independence and quality of life. As noted on the IRS website (link below) these expenses can include housing; education; transportation; health, prevention and wellness; employment training and support; assistive technology and personal support services; and other expenses.
The IRS is welcoming comments and the proposed regulations are available now for public inspection. Comments must be received by September 21, 2015. Please follow this link to the IRS website and scroll to the bottom if you would like to view the regulations or leave comments. You can also get additional information from the National Disability Institute here.
By Chris Morrison