ABLE Answers Their Top 3 Questions for July/August

1. Why should I consider putting some or all of the economic stimulus payment into an ABLE account?

An ABLE account can help you save for emergencies or for items or services not covered by benefits. If you don’t need to use the stimulus payment to pay for things right now, you could use some or all of it to start saving today. Your savings grow tax-free and most means-tested benefit programs like Medicaid, food stamps or housing assistance don’t count the savings as a resource. If you receive SSI, any amount over $100,000 in your ABLE account will count towards the resource limit and your monthly payment will be temporarily suspended until you reduce your countable savings below your resource limit. If you have not received your economic stimulus payment, please see updated guidance at: financialresiliencecenter.org.

2. Can an individual have both an ABLE account AND a Special Needs Trust, and can they have both a 529 college tuition account and a 529 ABLE account?

Yes. An individual may have all four types of accounts. All of the accounts have a specific purpose and the use of one of the accounts does not limit the use of the other types of accounts. With ABLE accounts, the account may be used to save and to pay for “qualified disability expenses” (QDEs) which enhance the health, independence or quality of life of a person with a disability. The IRS, which defines QDEs, has said that even basic living expenses like food or shelter are QDEs.

All of the accounts can work together. For example, a Special Needs Trust can contribute up to the annual limit of $15,000 into an ABLE account. And a 529 college tuition account may be used for educational expenses. However, if education is not in an individual’s future, those funds may be rolled over into a 529 ABLE account up to the annual contribution limit each calendar year. Both accounts must have the same beneficiary or be a qualifying member of the beneficiary’s family.

To learn more about rolling over a college savings account to an ABLE account, visit: ablenrc.org/irs-tax-reforms-to-able-accounts-savers-credit-and-529-rollovers/.

3. Can a person who receives SSI to pay for housing and food expenses use their ABLE savings to help pay for grocery expenses that have gone up as a result of COVID-19?

Yes, SSI needs to be used to pay for housing and food. ABLE savings can cover housing and food costs that SSI cannot cover. As of March 2020, the Social Security Administration recognizes food as a basic living expense and an ABLE qualified disability expense. Learn more.

More information can be found at https://www.ablenrc.org/july-august-2020-achievable-newsletter/#4