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Oregons ABLE Accounts to Open for Business in December 2016

Our past blogs have told you about a recently enacted federal law, the Achieving a Better Life
Experience Act of 2014 (the ABLE Act), which allows persons with disabilities to establish
accounts that can be used to pay expenses related to their disabilities.1 Up to $14,000.00 can be
contributed to an ABLE account each year. Account earnings grow tax deferred and, provided
the funds are used by the account owner to pay for qualified disability expenses, are tax free.
Such expenses would include education, health, housing, transportation, employment training
and financial management services.
The ABLE Act left it to the individual states to enact legislation to implement the Act. At this
writing four states (Ohio, Tennessee, Florida and Nebraska) have established ABLE accounts and
are open for enrollment. Of the participating states, Ohio, Nebraska and Tennessee allow out of
state residents to enroll in their programs.
Oregon is getting closer to launching its own ABLE account program. The Oregon 529 Savings
Board recently announced that the Oregon ABLE Savings Plan will open for enrollment this
December. The Plan will be managed by BNY Mellon and will allow participants a choice of
investment strategies. Contributions to such accounts will be limited to $14,000.00 annually with
total contributions to an account limited to $310,000.00.
In addition to the tax free growth features allowed under the federal legislation, the Oregon Plan
will provide tax benefits to ABLE accounts with beneficiaries under the age of 21. Contributions
to those accounts will be deductible for Oregon income tax purposes up to annual limits that are
indexed annually for inflation. For 2016, the maximum deduction will be $2,130.00 for single
filers and $4,620.00 for taxpayers filing jointly.
Congress is currently considering new legislation which would expand the scope of the ABLE
Act. The proposed ABLE to Work Act would allow people with disabilities who are employed to
deposit their earnings into their ABLE accounts, subject to a maximum deposit equal to the
federal poverty level (currently $11,770.00). Additional proposed legislation would expand
eligibility for ABLE accounts to people whose disabilities have an onset prior to age 46 as
opposed to the current law which limits eligibility to those whose disabilities were manifested
prior to age 26.
Like funds held in a special needs trust, funds held in an ABLE account are not considered
countable assets for purposes of Medicaid eligibility. Generally, Medicaid recipients are
limited to having assets of not more than $2,000.00 in order to maintain their eligibility. The
ABLE Act, however, allows account holders to maintain account balances as high as
$100,000.00 without compromising their ability to collect means tested government benefits.
1 For additional in depth information, please see our previous blog posts: ABLE Accounts: A New Savings Account
for People with Disabilities dated Jan 15, 2015; Almost ABLE: An Update on Savings Accounts for People with
Disabilities dated July 16, 2015; and, ABLE Accounts Can Be a Game Changer for People with Disabilities
dated August 4, 2016.

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This feature makes ABLE accounts an attractive complement to special needs trust and offers
disabled individuals a tax favored planning opportunity worthy of careful consideration.
9/15/2016 Charles A. Ford of Hunt & Associates, P.C. All rights reserved.

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