Last week, the House passed the “Achieving a Better Life Experience (ABLE) Act of 2014,” which provides for a new type of tax-advantaged savings program which would allow folks with disabilities to work and save without losing access to Medicaid and Supplemental Security Income (SSI).
The ABLE Act would be effective for tax years beginning after December 31, 2014. Contributions into an account could be made by any person and would not be tax deductible, though distributions used to pay qualified expenses, including distribution amounts attributable to investment earnings generated within the account, would not be taxable.
Eligible individuals must be blind or severely disabled, and must have become so before age 26. Each disabled person would be limited to one ABLE account, and total annual contributions by all individuals to any one ABLE account could be made up to the gift tax exclusion of $14,000, as adjusted annually for inflation.