New ABLE Account Benefits

The Internal Revenue Service (IRS) recently posted to remind those with disabilities that the Tax Cuts and Jobs Act made major changes to Achieving a Better Life Experience Act (ABLE) Accounts. ABLE Accounts are designed to help people with disabilities and their families save and pay for disability related expenses. Expenses can include housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology, personal support services and other disability related expenses.

The new changes within the Tax Cuts and Jobs Act include:

  • Annual Contribution Limit – The annual contribution limit is now $15,000, up from $14,000. This increase is tied to the annual gift tax exclusion rate, which will remain at $15,000 for 2019.
  • ABLE to Work Act –  If the beneficiary works, the beneficiary can contribute part, or all, of their income to their ABLE account. The additional permissible contribution amount equals the lesser of the individual’s gross income or the amount equal to the federal poverty line set for one person, currently $12,060. This additional contribution over $15,000 is only permitted if the beneficiary is not participating in his or her employer’s work retirement plan.
  • ABLE Financial Planning Act – Funds may now be rolled into an ABLE account from the designated beneficiary’s own 529 plan or from the 529 plan of certain family members.
  • Retirement Savings Contributions Tax Credit (Saver’s Credit) – ABLE account beneficiaries can qualify for the Saver’s Credit based on contributions they make to their ABLE accounts. Up to $2,000 of these contributions may qualify for this special credit designed to help low- and moderate-income workers.