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My disabled son has money in a checking account and he is preparing an application for SSI. Should he open an ABLE account?
Opening an ABLE account (achieving a better life experience) is a great idea for your son because it allows him to save money without affecting his eligibility for public benefits, such as SSI. Each state has its own statute authorizing ABLE accounts; the New York statute was effective in September 2017.
How Much Can You Contribute to an ABLE Account?
To qualify for an ABLE account, the beneficiary must be diagnosed with a significant disability before age 26. Contributions can be made to the account by the beneficiary, friends, family members, or 529 college savings account rollover, but the total annual contribution cannot exceed a certain limit, which is pegged to the gift tax exemption. This amount is $18,000 in 2024 and is subject to change year by year. Employed beneficiaries may deposit an additional amount up to the Federal Poverty Line for a one-person household, but only if they are not contributing to a retirement savings account in that year. The 2024 Federal Poverty line amount is $14,580 in the continental US.
However, ABLE account balances are limited. Under the SSI program, the first $100,000 in the account is disregarded as a resource. Any amount above that is counted as a resource. The SSI resource limit is $2,000. If you exceed this, SSI payments will stop until the resources are below the allowable limit.
What Can ABLE Account Funds Be Used For?
A disabled person may spend their ABLE account funds on “qualified disability expenses,” which are expenses and basic costs of living that are intended to maintain and improve their quality of life. These qualified expenses include but are not limited to education; health and wellness; groceries; housing; transportation; legal fees; assistive technology; personal support services; funeral/burial expenses, etc.
ABLE Accounts and Supplemental Needs Trusts
Depending on the amount of money your son has and the anticipation of future funds either from earnings or inheritance, he may want to consider creating a SNT (supplemental needs trust) in addition to the ABLE account. SNTs do not have contribution or balance limits, but they have more complicated rules for what the funds can be used for, they can be expensive to set up and complicated to manage.
