As many people with disabilities know, people who are disabled before age 26 qualify to establish an ABLE Account.
Who can contribute to a Texas ABLE account?
Up to $15,000 per year (2018) can be contributed to an ABLE Account. An ABLE Account can be accessed directly by the person with disabilities. It can hold up to $100,000 at any one time without affecting needs-based government benefits and, in Texas, up to $370,000 over a lifetime. The contributions can be made by anyone.
What can Texas ABLE account distributions be used for?
Distributions are tax free if the ABLE account beneficiary uses them to pay qualified disability expenses such as housing, education, transportation, health-care, employment training and support, assistive technology and personal support services.
Can I contribute to my own ABLE account?
Through 2025 people with disabilities who are working can contribute up to an additional $12,140 (2018) from their earnings to their ABLE Account (as long as their employer does not contribute to a workplace retirement plan on their behalf).
Through 2025 people with disabilities can also roll money from their 529 plans (qualified tuition programs) or those of certain relatives into their ABLE Account.
In addition, ABLE Account beneficiaries can qualify for a $2,000 Saver’s Credit, saving for retirement and decreasing income tax or increasing the tax refund. To do this they must file Form 8880, Credit for Qualified Retirement Savings Contributions.
Special Needs Planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.
She assists families of people with special needs, people planning for the retirement years and people settling estates.