The Federal ABLE Act
The Federal ABLE (Achieving a Better Life Experience) Act was enacted in 2014 and is codified as Section 529A of the Internal Revenue Code. It permits states to establish personal savings accounts for persons with disabilities that will not be considered countable resources for Medicaid and SSI eligibility. SSI, or Supplemental Security Income, is the Social Security program that provides a monthly payment of up to $735 (2018) to disabled persons or persons over age 65 whose income is less than that amount and whose countable resources (assets) do not exceed $2,000 (2018).
The disabled individual (or the guardian or conservator for an incapacitated beneficiary) has ownership and control over the distributions from an ABLE account. Payments from the account for what are defined as “qualified disability expenses” will not be taxable income; however, payments for things other than the qualified expenses will be subject to income tax and a 10% tax penalty.
Qualified Disability Expenses
- 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
The Mississippi ABLE Act
The Mississippi ABLE Act was signed into law in 2017 with an implementation plan to be developed by October 1, 2017, and accounts are to be available to residents by July 1, 2018.
An individual may have only one ABLE account, and it may be created and/or funded by anyone. A person who contributes to an ABLE account may deduct that contribution from their Mississippi income tax. The maximum that can be contributed to any ABLE account is $14,000 (2018) per year (subject to future increases by Congress).