IRS Eases Rules on ABLE Accounts Making It Easier to Plan for People with Special Needs



Hazen Elder Law is Now Hazen Law Group

Hazen Elder Law is Now Hazen Law Group

Harrisburg, PA (Law Firm Newswire) January 29, 2016 – The Internal Revenue Service (IRS) has relaxed its regulations for new accounts that will permit people with disabilities to save money without risking loss of their government benefits. In 2015, the IRS proposed rules governing how accounts created under the Achieve a Better Life Experience (ABLE) would function. However, the agency met with a considerable amount of opposition from disability advocates and state officials who stated that the proposed rules would be unduly onerous.

In response, the IRS has issued preliminary guidelines pending release of the final regulations that include less strict reporting requirements. For example, those opening ABLE accounts will not be required to provide medical documentation, but will have to certify under penalty of perjury that they were diagnosed with a condition that qualifies them for such an account. In addition, the IRS hinted that ABLE programs will not have to ask for tax identification numbers from those contributing to ABLE accounts with the exception of limited circumstances, and program administrators will not be required to classify the ways in which funds in the account are used.

In addition, in December, a bipartisan tax deal included a provision eliminating the requirement that ABLE accounts be established in the state in which the beneficiary resides. This will make the accounts much more accessible.

Prominent Pennsylvania elder care and disability planning attorney Marielle Hazen states, “The revised rules will help facilitate operation of the ABLE accounts without making plan participants ineligible for government benefits.”

It is projected that ABLE accounts will become available to consumers in 2016, but the precise time will differ by state. According to the National Down Syndrome Society, thus far, 34 states have given their approval of such legislation. However, these states are still figuring out the details for managing their programs. The new accounts will enable individuals with disabilities to accumulate up to $100,000 without forfeiting their right to government benefits, including Social Security. But they will retain Medicaid coverage regardless of the amount of funds saved in their ABLE account. Those who qualify for the new accounts are people with disabilities that arose prior to age 26.

Upon the death of the account beneficiary, states may submit a claim for reimbursement of Medicaid benefits paid on behalf of the beneficiary. For this reason, and others, these accounts will not be the best option in many situations, but they will be a helpful option for many.

Learn more at Hazen Law Group 2000 Linglestown Road Suite 202 Harrisburg, PA 17110 Phone: (717) 540-4332
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