Estate planning for a parent of a disabled child under the age of 26 years, especially if the child is on, or likely to apply for, SSI or Medicaid, should include discussion and possible use of the Iowa A.B.L.E. accounts.
An ABLE account can be set up for a person with disability (who is disabled by age 26), even if the person is on SSI or Medicaid. Under current rules, the funds that are deposited into the ABLE account are not counted for resources purposes, and currently do not cause a risk of losing SSI or Medicaid. Withdrawals or payments from the account, for approved expenses, are “not counted” as income for disability purposes.
The approved expenses that can be paid out of that ABLE account include housing, transportation, education, health, prevention wellness, financial management, legal fees, oversight and monitoring, funeral and burial expenses, technology and personal support services, and other expenses that are approved. However, if money is withdrawn from the ABLE account for expenses that are not approved, then the withdrawals are included as income and might affect the disabled child's eligibility for SSI or Medicaid eligibility for that particular month.
A parent, family or others could establish the account for the disabled child and can put money into the account at the rate of $14,000 per year (up to a maximum of $100,000). If the ABLE account has more than $100,000, then the account could affect SSI eligibility.
The income of earnings in the account are tax free. The account would not pay income taxes on the investments that are earned. Contributions to the account might be deductible from the gross income of the giver under the Iowa tax law. There is a deduction maximum.
Investment of the account is limited to about six investment options plus a checking account.
There is free additional information available on the Iowa State Treasurer web site or call 1-888-609-8910 . The Iowa website: www.iable.gov.
Joe Creen
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