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1 1 (March 17, 2017)

handle is hein.crs/govcdvy0001 and id is 1 raw text is: FF. ' riES- - $r h ,. , Updated March 17, 2017 Achieving a Better Life Experience (ABLE) Programs On December 19, 2014, President Barack Obama signed into law the Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE Act) of 2014 as part of P.L. 113- 295 (Division B). The ABLE Act created section 529A of the Internal Revenue Code (IRC), which allows states to establish and maintain a new type of tax-favored savings program designed specifically for individuals with disabilities. The stated purpose of the act is to * encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life; and * provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, Medicaid, Supplemental Security Income (SSI), the beneficiary's employment, and other sources. Under a state's qualified ABLE program, contributions may be made to the investment account of an eligible disabled individual, known as the designated beneficiary. Funds from an ABLE account may be used for the short-term needs or long-term benefit of the designated beneficiary to pay for qualified disability expenses. ABLE programs are modeled loosely on 529 college-savings plans, also known as qualified tuition programs. One notable difference between the two is that, unlike 529 plans, a designated beneficiary is limited to one ABLE account at a time. Contributions to an ABLE account are not tax deductible and must be made in cash from the contributor's after-tax income. Total annual contributions to an ABLE account of a designated beneficiary must not exceed the annual gift tax exclusion, which is $14,000 in 2017. (This amount is adjusted annually for inflation.) Thus, the maximum amount that an ABLE account can receive in 2017 from all contributors (e.g., the designated beneficiary, family, and friends) is $14,000. Contributors are not limited in the number of different beneficiaries to which they may contribute. A qualified ABLE program must ensure that cumulative contributions to an ABLE account on behalf of a designated beneficiary do not exceed the sponsoring-state's limit for aggregate contributions under its 529 plan. In most states, this limit is between $250,000 and $500,000 per beneficiary. No additional contributions may be made to an ABLE account once its balance reaches the cumulative limit. A designated beneficiary is the eligible individual who establishes and owns the ABLE account. However, under proposed regulations issued by the Internal Revenue Service (IRS), if an individual is unable to establish or manage an ABLE account, an agent under a power of attorney, or if none, a parent or legal guardian may establish and exercise signature authority over an ABLE account on behalf of the designated beneficiary. To establish an ABLE account, an individual must have a qualifying impairment that began before age 26. Specifically, the individual must * be entitled to Social Security or SSI benefits due to blindness or disability and such impairment occurred before the date the individual attained age 26; or * be certified by a physician that his or her impairment meets the blindness or disability standards used for children under the SSI program, regardless of the individual's age, and such impairment occurred before the date the individual attained age 26. Qualified disability expenses (QDEs) are expenses incurred for the benefit of the designated beneficiary and are related to his or her disability. QDEs include costs related to education, housing, transportation, employment training and support, assistive technology and personal support services, health and wellness (including long-term services and supports), financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses identified in guidance published by the IRS. In the proposed IRS regulations, QDEs are defined to include basic living expenses and are not limited to costs for which there is a medical necessity or which benefit the designated beneficiary exclusively. ABLE accounts have two distinct benefits for eligible individuals with disabilities. First, assets in an ABLE account can grow tax-free annually and distributions from the account for QDEs are not included in the designated beneficiary's gross income for federal income tax purposes. However, if distributions from an ABLE account are used for non-QDEs, the earnings portion of the withdrawal (i.e., the part attributable to investment growth) is subject to federal income tax as well as a 10% penalty. Second, assets in an ABLE account and distributions from the account for QDEs are excluded in determining a designated beneficiary's eligibility for most federal means- tested programs, including Medicaid. Under the SSI program, however, only the first $100,000 in an ABLE account is excluded. If the amount of ABLE funds over $100,000 causes an SSI recipient to exceed SSI's $2,000 .O 'T p\w -- , gn'a', goo mppm qq\ a , q 'S I 11LIANJILiN,

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