IAble - A New Way to Save for Individuals with Disabilities is Here!

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Mar 13, 2017

By Mike Russ, Investment Advisor Rep at World Trend Financial

For the first time in our history, individuals with a disability and families of disabled individuals have the opportunity to open a tax free savings account, called IAble (Iowa Able). Before IAble, saving for the needs of a disabled individual was worrisome for families due to the potential loss of Social Security Disability benefits. The IAble account provides families an additional way to save for expenses without the concern of losing needed Social Security benefits.

ABLE stands for “Achieving a Better Life Experience” and is a result of the passage of the Stephen Beck Jr., Achieving a Better Life Act of 2014. Signed into law as of 2014, the state of Iowa is one of the first of a handful of states that are now open for enrollment through the IAble account.

Prior to IAble, a Special Needs Trust was one of the primary methods of saving for a child or family member with a disability. For some families, a Special Needs Trust can be costly to establish and the growth in the account is taxed annually. The IAble account bridges the gap where the Special Needs Trust falls short. The IAble account only requires a $25 contribution to get started and is triple tax deferred, contributions are tax deductible (maximum deduction limits are $3,239 for 2017), the growth in the account is tax deferred and qualified withdrawals are tax free. The IAble account provides families with significantly more planning opportunities.

IAble Overview:

Who can Open an IAble Account?

Eligible individuals with disabilities (over the age of 18) can open up an account on their own, or the parent or legal guardian can open up an account on their behalf.

How many IAble accounts can I open?

You can only open 1 account per beneficiary.

What is the maximum annual contribution I can make in the account?

$14,000; equal to the federal maximum gift tax limit.

Who can make contributions to the account?

Anyone can make a contribution to the account and receive a state tax deduction up to the maximum limit ($3,239 for 2017), including, friends, family members and the Individual the account is set up for.

How do I know if I am eligible?

You are eligible if:

  • You were diagnosed with a disability before the age of 26 (You have to have been diagnosed before the age of 26 but do not have to be under the age of 26); and,
  • One of the following is true:
    • You are eligible for SSI or SSDI because of disability;
    • You experience blindness as determined by the Social Security Act; or
    • You can produce a signed diagnosis from a licensed physician.

Do I have to prove eligibility before opening an account?

No, but if you do not meet one of the requirements above, and are uncertain about whether or not you qualify, you can send in a signed diagnosis from a licensed physician to the IAble legal team and they will verify your eligibility before opening an account.

*If you do not currently receive SSI or SSDI, we highly recommend you contact IAble regarding your eligibility before opening an account.

Do I have to live in Iowa to open an account?

No, but to receive the state tax deduction you must be an Iowa resident. If you are not a resident, you can open an IAble account and still receive the benefits of tax deferred growth and tax free withdrawals on qualified expense. If you are not an Iowa resident, you can check to see if your state has established the ABLE program so you can receive a state tax benefit here: http://www.ablenrc.org/.

To learn more about IAble accounts you can visit the website: https://www.iable.gov/ or contact Mike Russ at mruss@tld-inc.com, and he will be happy to walk you through it so you can start planning for your loved one.