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ABLE stands for Achieving a Better Life Experience and was created in 2014 by the ABLE Act. An ABLE account is very much like a 529 plan however, however there are some key differences The purpose of the ABLE account is to allow families to set aside money for the benefit of their child to cover the costs of qualified disability expenses. If you are unfamiliar with ABLE accounts please read a prior article we posted What is an ABLE Account and Do I Need One? for more information. But for now let’s dive into the major federal updates.
1. Expansion of Eligibility Age
The ABLE Age Adjustment Act, enacted in December 2022, will take effect on January 1, 2026. This legislation raises the age of onset for disability eligibility from before age 26 to before age 46, thereby extending ABLE account access to an estimated 6 million additional individuals, including approximately 1 million veterans. ABLE National Resource Center
2. Permanent Extension of Key Tax Provisions
The Ensuring Nationwide Access to a Better Life Experience (ENABLE) Act, reintroduced in February 2025, seeks to make permanent several tax advantages associated with ABLE accounts that are set to expire at the end of 2025. ABLEnow
- ABLE to Work: Allows employed individuals with disabilities to contribute additional income to their ABLE accounts beyond the standard annual limit.
- ABLE Saver’s Credit: Provides a non-refundable tax credit of up to $1,000 for low- to moderate-income individuals who contribute to their ABLE accounts.
- 529 to ABLE Rollover: Permits the rollover of funds from 529 education savings accounts to ABLE accounts without incurring income tax, provided the amounts are within the annual contribution limit.
By making these provisions permanent, the ENABLE Act aims to provide greater financial stability and planning certainty for individuals with disabilities and their families. Autism Speaks
3. Introduction of the ABLE Tomorrow Act
In December 2024, Representative Cathy McMorris Rodgers introduced the ABLE Tomorrow Act, which proposes several enhancements to the existing ABLE framework (Note this Act has been introduced, but not passed at the time of this article):
- Elimination of the Medicaid Clawback: Removes the provision that allows states to recoup Medicaid expenses from a deceased beneficiary’s ABLE account, encouraging more individuals to utilize these accounts without fear of asset recovery.
- Employer Contributions: Allows employers to contribute to an employee’s ABLE account in lieu of contributions to retirement plans, promoting workforce participation among individuals with disabilities.
- Enhanced Contribution Flexibility: Introduces provisions for one-time lump-sum contributions beyond the annual gift tax limit under certain circumstances.
Looking Ahead
These legislative advancements signify a concerted effort to empower individuals with disabilities through enhanced financial tools and protections. As the implementation dates approach, it’s crucial for eligible individuals and their families to stay informed and take proactive steps to leverage these opportunities. Consulting with financial advisors and exploring state-specific ABLE programs can provide tailored guidance to maximize the benefits of these accounts. ABLEnow
For more information on ABLE accounts and to determine eligibility, visit the The ABLE National Resource Center
*The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
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Many of us would like to give our kids or grandkids a good start in life, but leaving an inheritance can be trickier than many realize. Tax laws are constantly changing, and the strategies that worked years ago may have more limited benefits today.
Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax or legal professional before modifying any part of your overall estate strategy.
How are you preparing for retirement? This is the most important question of all. If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes in your life, conferring with a financial professional experienced in retirement approaches may offer some guidance.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and
produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite
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