2024: 

The MLO Minute: “Annual Contributions to ABLE Accounts Have Increased for 2024” 

By Kelly Hayes, Esq. and Dennis McAndrews, Esq. — 

ABLE accounts are important financial tools for many persons with disabilities.  ABLE accounts can protect assets and permit them to grow tax-free while continuing to maintain eligibility for Supplemental Security Income and Medicaid.  Assets up to $100,000 can be preserved in ABLE accounts without loss of SSI benefits, and there is no limit for Medicaid purposes.

 

Distributions from an ABLE account must be made for “Qualified Disability Expenditures,” and those expenditures can include housing expenses and food (“a Basic Living Expense”).

Distributions from an ABLE account for Basic Living Expenses are permissible without reducing SSI or endangering Medicaid.  This is an important benefit, as most gifts or distributions from other trusts for these expenses can be considered In-Kind Support and Maintenance which can reduce SSI benefits.

 

The Internal Revenue Service has announced that the annual contribution which may be made from all sources to an individual’s ABLE account has been increased for 2024 to $18,000.  In light of the permissibility of expenditures for Basic Living Expenses, we set out below guidance from the Social Security Administration concerning these expenditures:

 

• Qualified disability expenses (QDEs): QDEs are related to the blindness or disability of the designated beneficiary and for the benefit of the designated beneficiary. In general, a QDE includes, but is not limited to, an expense for: Education; Housing; Transportation; Employment training and support; Assistive technology and related services; Personal support services; Health; Prevention and wellness; Financial management and administrative services; Legal fees; Expenses for ABLE account oversight and monitoring; Funeral and burial; and Basic living expenses.

 

• Housing expenses: Housing expenses for purposes of an ABLE account are similar to household costs for in-kind support and maintenance purposes. However, for ABLE purposes, food is considered a qualified disability expense (basic living expense), but not a housing expense. Housing expenses include expenses for the following: Mortgage (including property insurance required by the mortgage holder); Real property taxes; Rent; Heating fuel; Gas; Electricity; Water; Sewer; and Garbage removal.

 

ABLE accounts are an excellent part of an estate plan for persons with disabilities, and can be a valuable adjunct to a special-needs trust which is usually a critical part of a family’s estate plan for a disabled child or other family member.