Virginia has become the first state to approve the ABLE Act legislation. The ABLE Act, passed with overwhelming bipartisan support at the close of 2014, allows people with disabilities to open special accounts, similar to 529 plans, where they can save up to $100,000 without risking eligibility for Social Security and other government needs-based programs. These accounts should be available to Virginia residents by early 2016.
Some of the requirements that will apply to all state programs:
- An eligible individual is a person (a) who is entitled to benefits on the basis of disability or blindness under the Supplemental Security Income (SSI) program or under the Social Security disability, retirement, and survivors program OR (b) who submits certification that meets the criteria for a disability certification (to be further defined in regulations). An eligible individual’s disability must have occurred before age 26.
- An ABLE account may not receive annual contributions exceeding the annual gift-tax exemption ($14,000 in 2015). So if 10 individuals wanted to contribute to an individual’s ABLE account, the total of all their contributions may not exceed $14,000 in any given year. A State must also ensure that aggregate contributions to an ABLE account do not exceed the state-based limits for 529 accounts.
We’ll continue watching Virginia, and will await news from Maryland and the District and their responses to the ABLE Act. As soon as programs are established, you can expect a special informational event on this topic, as well as other tools in the Special Needs Planning toolbox.