Are you ready to establish an Achieve a Better Life Experience (ABLE) account? If so, a recent IRS notice can help ease the administrative requirements. Here's what you need to know.
ABLE accounts were created by the Tax Increase Prevention Act of 2014. These tax-advantaged accounts are designed to help you build savings to care for yourself or a loved one with disabilities while maintaining eligibility for benefit programs such as Medicaid. Generally you'll qualify for an ABLE account if your disability occurred before age 26.
While states will create the programs that allow ABLE accounts, the IRS issues the tax guidance, and the rules are similar to those for Section 529 college savings plans. That means ABLE accounts grow tax-deferred and you can take tax-free distributions when you use the funds to pay qualified disability expenses. Anyone can contribute to an ABLE account, up to the maximum limit of $14,000 for 2016.
Under the latest notice from the IRS, three ABLE account requirements have been changed.
Give us a call for more information about these accounts and other tax-related disability benefits.
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To better serve our clients and friends, to keep you up-to-date and informed, our blog is a resource for tax tips and overall accounting related articles. We hope you find this useful!