What is an ABLE Account & How Are ABLE Accounts Beneficial?

Introduction

For individuals with disabilities, managing finances can often be a complex task. Fortunately, the Achieving a Better Life Experience (ABLE) Act has paved the way for a powerful financial tool – ABLE accounts. These accounts are specially designed to help individuals with disabilities and their families save for the future without jeopardizing essential benefits. Texas is 1 of 46 states (and the District of Columbia) offering ABLE programs. In Texas, ABLE accounts offer a range of benefits making them a valuable resource for many.

What is an ABLE account?

An ABLE account is a tax-advantaged savings account for individuals with disabilities. These accounts provide a way to save and invest money without affecting an individual’s eligibility for crucial government benefits like Supplemental Security Income (SSI) and Medicaid.

Who is eligible to open an ABLE account?

To be eligible for an ABLE account in Texas, individuals must meet the following criteria:

1. Onset of Disability Before Age 26: The disability must have occurred before the age of 26.
2. Eligibility for SSI or SSDI: The individual must meet the eligibility criteria for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) or obtains a disability certification—has a condition listed on Social Security Administration’s list of Compassionate Allowances Conditions or obtains a physician’s diagnosis of medically determinable physical or mental impairment.
3. Residency: The account owner must be a resident of Texas.

What are the benefits of ABLE accounts?

The benefits of ABLE accounts include tax advantages, preservation of government benefits, control and flexibility, convenience and accessibility, and a range of eligible expenses.

1. Tax Advantages: Contributions made to an ABLE account are made with after-tax dollars, but the earnings grow tax-free. This means that any interest, dividends, or capital gains earned within the account are not subject to federal income tax.
2. Preservation of Benefits: One of the most significant advantages of ABLE accounts is that they allow individuals with disabilities to maintain eligibility for essential government benefits. Assets held in the ABLE account, up to a certain limit (currently up to $100,000), are not counted for means-tested programs like SSI and Medicaid.
3. Control and Flexibility: ABLE account owners, or their designated representatives, have control over how the funds in the account are invested and spent. This provides a level of financial autonomy that may not be possible through other means.
4. Convenience and Accessibility: Opening and managing an ABLE account is relatively straightforward. In Texas, residents can easily set up and manage their accounts online, providing a convenient way to monitor and control their finances.
5. Range of Eligible Expenses: Funds from an ABLE account can be used for a wide range of qualified disability-related expenses. This includes, but is not limited to, education, healthcare, housing, transportation, assistive technology, and more.

Is it easy to open an ABLE Account?

Yes, it is easy when you follow these steps.

1. Choose a Program: Select an ABLE program that suits your needs. Texas residents can choose from various state-sponsored and national programs.
2. Provide Necessary Information: Gather the required documents, including proof of disability and personal identification.
3. Complete the Application: Fill out the application form, either online or through mail, and submit the necessary documents.
4. Make Contributions: Fund the account with contributions. These can be made by the account owner, family members, or others.
5. Manage the Account: Once the account is open, monitor its performance and use it for qualified expenses as needed.

Conclusion

ABLE accounts are a game-changer for individuals with disabilities, offering a secure and tax-advantaged way to save for the future. In Texas, these accounts provide a range of benefits, from tax advantages to preserving essential benefits.

By understanding the eligibility criteria and taking the steps to open an ABLE account, individuals and their families may achieve financial stability and independence for individuals with disabilities while protecting their entitled government benefits.

Open your ABLE account today and unlock a brighter future. Here is a link where you can learn more about enrollment from the Texas Comptroller of Public Accounts: Texas ABLE | Savings Program for Texans with Disabilities.