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What you should know about ABLE accounts

Achieving a Better Life Experience (ABLE) accounts are savings accounts that allow disabled persons and their loved ones to save money for disability-related expenses. Such expenses could include technological advances to aid in independence, home renovations for accessibility, and dental/medical costs not covered by government benefits (like social security disability income (SSDI), supplemental security income (SSI), Medicare or Medicaid).

The Massachusetts equivalent of the federal ABLE account is the Attainable Savings Plan. The ASP functions similarly to ABLE accounts, in that they both cover disability-related costs and contributions to them are generally eligible for federal saver’s credits.

Contributions into ASP accounts by loved ones or the beneficiary him/herself are capped (like ABLE accounts) to $15,000 in fiscal year 2018, up from $14,000 in 2017. This change came about because of the federal Tax Cuts and Jobs Act of 2017.

ASP and ABLE accounts can now also be funded by rollover contributions from 529 savings accounts. These contributions are still subject to the annual cap of $15,000, but they do not come with any tax penalties or consequences.

Further contributions can be made into ASP/ABLE accounts by beneficiaries who work. Provided the beneficiary is not participating in his or her employer’s retirement plan, he or she can put up to $12,060 in additional funds into the account. The individual federal poverty line determines this amount; if the person’s wages are less than the poverty line, however, then the maximum contribution limit is the person’s actual wages.

ASP accounts are also now eligible for what are known as "Saver's Credits" in certain circumstances. A qualified tax planner or attorney can provide more information about the criteria for seeking saver's credits in conjunction with one of these plans. 

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