Sometimes they can seem more complicated than they really are. If it puts her available resources above the $2,000 threshold, she’ll lose her SSI in that month. Wrong. Sharon is on Supplemental Security Income (SSI). Having an ABLE account doesn’t count towards your eligibility for Medicaid regardless of the amount saved in the account. The ABLE Act itself created a new income tax code Section 529A. If you spend your STABLE Account funds on a non-qualified expense, you will have to pay regular income taxes, plus a 10% additional tax, on the earnings portion of those non-qualified funds. If an ABLE Act account distribution is made for a purpose that doesn’t qualify, not very much happens. If you’re eligible for SSI, the money must be used within the month it was withdrawn so it doesn’t affect your SSI eligibility. [See Internal Revenue Code section 529A(e)(5)]. Consider investment objectives, risks, charges, and expenses before investing. Earnings on investments, if any, accumulate on a tax-deferred basis while in an Account. There is, for example, a special kind of tax-beneficial trust called a “qualified disability trust.” That would be a perfect place to utilize the tax code’s definition of a qualified disability expense, right? Consider investment objectives, risks, charges and expenses before investing. The Texas ABLE Program is distributed by Northern Lights Distributors, LLC. If she has to withdraw the money from her ABLE Act account and hold the proceeds, she just needs to make sure she handles both sides of the transaction before the end of the month (better yet, right after the first of the month). You could lose money by investing in an Oregon ABLE Savings Plan account. NorthStar Financial Services Group, LLC (“NorthStar”) is the program manager and the Program is distributed by Northern Lights Distributors, LLC and administered by Gemini Fund Services, LLC. Fees are subject to change. The “non-qualified” expenditure is probably not very consequential. Funds in a CalABLE account can be used for many different disability-related expenses, ranging from education, employment support, housing, transportation, assistive technology and healthcare. ABLE accounts allow Eligible Individuals the opportunity to save and fund a variety of Qualified Disability Expenses without endangering eligibility for certain benefits that are critical to their health and well-being, such as Medicaid and Supplemental Security Income (SSI). Accounts in the Program have not been registered with the U.S. Securities and Exchange Commission or with any state securities commission pursuant to exemptions from registration available for securities issued by a public agency or instrumentality of a state. Program Disclosure Statement and Participation Agreement, Texas Prepaid Higher Education Tuition Board. And, other than the Bank Savings Account Option, accounts are not insured or guaranteed by the FDIC. ›, What happens if I withdraw money for a non-eligible expense? See the list of approved categories of qualified disability expenses for more details. Assuming that her account earned $50 in income in the few months it has been open, the result might be that she has to pay income taxes on about $1 of that income. Such expenses include, but are not limited to, expenses related to the Designated Beneficiary’s 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 oversight and monitoring, funeral and burial expenses, and other expenses that may be identified from time to time by the IRS. But what kind of expenditure is a qualified disability expense? And does the term mean anything outside of ABLE? Would it include rideshare expenses for Sharon, who has difficult problems with mobility? It doesn’t mean that the beneficiary loses Social Security payments or Medicaid eligibility. If, and when, material updates become available we will update this website and the Program Disclosure Statement. For any year in which there is a withdrawal from an Account, the Program will provide Form 1099-QA to the IRS and Designated Beneficiary. The whole concept of a qualified disability expense is difficult to grasp. If you’re eligible for SSI, the money must be used within the month it was withdrawn so it doesn’t affect your SSI eligibility.
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