On November 28, 2017, the State of Maryland opened enrollment for Maryland ABLE Accounts. This new option allows some people with disabilities and their families to save for the future while remaining eligible for public benefits. For many people who are disabled, it can be vitally important to preserve eligibility for public benefits.
The ABLE (Achieving a Better Life Experience) Act allows certainly qualified savings accounts to receive preferential tax treatment whilesavings for disability related expenses is accumulating. With some exceptions, the funds in ABLE accounts are disregarded when assessing eligibility for means-tested public benefits.
To be an ABLE account beneficiary, an individual must meet the Social Security definition of disability or, for the current tax year, have filed a valid disability certification with the Secretary of the Treasury. The intended beneficiary must have developed a qualifying disability before the age of 26 to be eligible for an account.
Total annual contributions to an ABLE Account may not exceed the federal gift tax limit. The annual exclusion is $14,000 in 2017 and is $15,000 in 2018.
The funds from an ABLE account may be used for qualified expenses relate to the beneficiary’s disability and may include housing, education, transportation, employment training and support, assistive technology, health, financial management, and legal fees. If ABLE Account funds are used for non-eligible expenses, the growth on funds in the account will be taxed and a 10% penalty on those earnings is imposed. Non-qualified withdrawals may be considered income and may jeopardize eligibility for public benefits including SSI benefits or Medicaid.
Contact the lawyers at Andalman & Flynn in Maryland for help in determine whether a Maryland ABLE account is right for you or for someone you know. If you need help with any of a variety of legal matters, the attorneys at Andalman & Flynn are here. Don’t hesitate to contact us today at 301-563-6685.
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