Drake Software blog for tax pros, covering tax, IRS news, and more

House Passes ABLE Act

House Passes ABLE Act

Legislation to Provide Opportunity for Americans with Disabilities

The US House of Representatives has passed H.R. 647, the Achieving a Better Life Experience Act’.  The Act is designed to provide individuals and families with the opportunity to save for the purpose of supporting individuals with disabilities in maintaining their health, independence, and quality of life.

The measure, which passed by a vote of 404 to 17, was the first major legislative act for disabled persons since the Americans with Disabilities Act.

Below is an excerpt from the official press release found on Representative Rodney Davis’ website:  

Starting in 2015, States would have the option to establish an ABLE program, under which eligible individuals with disabilities may establish an ABLE account, which are modeled after current Section 529 savings accounts. To be eligible, individuals must: 

  • Be severely disabled before turning age 26, based on a marked and severe functional limitation; or
  • Receive benefits under the SSI or Disability Insurance (DI) programs. 

Other key features of the program include the following: 

  • Contributions into an ABLE account can be made by any person;
  • Contributions are not tax deductible;
  • Income earned by the accounts is not taxed;
  • Account withdrawals, including portions attributable to investment earnings generated by the account, for qualified expenses are not taxable;
  • Qualified expenses are those related to the individual’s disability, including health, education, housing, transportation, training, assistive technology, and personal support;
  • Individuals are limited to one ABLE account, and total annual contributions by all individuals to any one account can be made up to the gift tax limit ($14,000 in 2014);
  • Aggregate contributions to an ABLE account are subject to an overall limit matching the State limit for Section 529 accounts;
  • Individuals with ABLE accounts can maintain eligibility for means-tested benefits. ABLE account balances and withdrawals are completely excluded for the purpose of Medicaid and other benefit programs. In SSI, the first $100,000 in account balances is excluded; and
  • In the event a beneficiary of an ABLE account dies (or no longer has a disability) and has remaining assets in the account, the assets are first distributed to any state Medicaid plan that provided medical assistance to the beneficiary.

Additionally, any costs for the program have been offset in the bill. As the CBO notes, “enacting H.R. 647 would reduce unified budget deficits by $33 million over the 2015-2024 period. The bill would reduce outlays by $294 million and reduce revenues by $261 million over those 10 years.”


Sources:  Various; and statement of Rep. Rodney Davis (R-IL) at  http://rodneydavis.house.gov/news/documentsingle.aspx?DocumentID=398519


admin taxing_subjects