What is an ABLE account?
The money deposited or withdrawn from a qualified ABLE account generally does not count toward a household's income.
There are two exceptions to this rule.
- Count any money a single donor deposits in the account beyond the federal gift tax exclusion or
- any money withdrawn to pay expenses that are not a qualified disability expenses toward the household’s income.
Gift tax exclusion
The federal gift tax exclusion was $14,000 in 2016 and 2017, and it is $15,000 for 2018. At each certification or renewal, verify all deposits for the past 12 months. Determine if a donor contributed more than the gift tax exclusion during that calendar year. When a donor's contributions exceed the gift tax exclusion, the amount above the exclusion counts toward the household's income. Count the non-excluded amount as income in the month the donor gave the money.
Qualified Disability Expenses
An ABLE account beneficiary can withdraw funds from the account for qualified disability expenses. At each certification and renewal, you must verify that any withdrawals were for qualified expenses.
Qualified disability expenses must relate to the beneficiary's blindness or disability and must benefit the beneficiary.
These expenses include but are not limited to
- employment training and support,
- assistive technology and personal support services;
- health, prevention, and wellness,
- financial management and administrative services,
- legal fees,
- expenses for oversight and monitoring,
- funeral and burial expenses, and
- other expenses.
Contact the financial institution to ensure any withdrawals were for qualified disability expenses. You might have to request verification from the client if the financial institution cannot confirm these expenses. When the client withdrawals for a reason other than a qualified expense, count the amount withdrawn as a part of the household's income in the month it leaves the account.