ABLE Account Changes Under OBBBA: Tax-Advantaged Savings | GBQ

Empowering Individuals With Disabilities: The ABLE Account Advantage  

Tax-Advantaged Savings For A Secure Future 

ABLE accounts are tax-advantaged savings accounts for individuals with disabilities, designed to allow them and their families to save for qualified disability expenses (QDEs) without jeopardizing eligibility for means-tested federal benefits such as Supplemental Security Income (SSI) and Medicaid. These accounts are established under state-run programs, but federal law sets out the main rules. 

Major ABLE Account Changes Under The One Big Beautiful Bill Act: At-A-Glance Comparison 

Essential ABLE Account Facts

This section provides a concise summary of essential facts about ABLE accounts under the OBBBA, highlighting updated aggregate limits, permanent inflation adjustments to contributions, and key compliance rules. It outlines the tax-free growth opportunities, new reporting requirements, and the consequences of nonqualified distributions.

• Aggregate Limit:  The total balance in an ABLE account cannot exceed the state's limit for 529 college savings plans, but SSI disregards only the first $100,000 for resource purposes. 
• Inflation Adjustments:  The OBBBA makes permanent the inflation adjustment for the annual contribution limit and the additional contribution for working beneficiaries. 
• Reporting & Compliance:  The OBBBA maintains and clarifies reporting requirements for ABLE programs, including electronic reporting to the IRS and Social Security Administration. 
• Tax-Free Growth:  Earnings in an ABLE account are not taxed if used for QDEs, which are broadly defined to include education, housing, transportation, health, employment support, and more. 
• Nonqualified Distributions:  If distributions exceed QDEs, the earnings portion is included in gross income and subject to a 10% penalty, with exceptions for death or return of excess contributions. 

OBBBA Opens New Doors To Financial Empowerment 

The OBBBA significantly expands and enhances ABLE accounts by broadening eligibility, making higher contribution limits and rollovers permanent, increasing the saver's credit, and clarifying and improving the administration of these accounts. These changes are designed to further the goals of financial independence and security for individuals with disabilities, while maintaining the protections for means-tested federal benefits. 

If you are ready to maximize your ABLE account benefits or need guidance on OBBBA changes,  contact GBQ today  for expert assistance and personalized support. Let us help you navigate the new rules and secure your financial future! 

In Search Of Additional Guidance? Check Out These Resources: 

IRS Issues Transitional Guidance On Reporting Interest From Specified Passenger Vehicle Loans 

Hidden Assets In The Digital Age: Cryptocurrency & Family Law 

IRS To Phase Out Paper Refund Checks