In December 2014, the federal Achieving a Better Life Experience (ABLE) Act created a new type of tax-advantage account, the ABLE account, for individuals with disabilities. On June 1, 2016, Ohio became the first state to launch its own ABLE account available to eligible individuals nationwide.
What Is An ABLE Account?
Similar to 529 Qualified Tuition Plans for college savings, ABLE accounts are designed to encourage disabled individuals and their families to save money to help support the disabled individual’s needs, whether that means funds for their healthcare, independent living, etc. ABLE accounts allow eligible individuals to save money yet still qualify for needs-based programs, such as Medicaid or Social Security.
An eligible individual is defined as a person with a disability that occurred prior to age 26, and they must do one of the following:
Distributions from the account should only be used for qualified disability expenses. Account earnings used for non-qualified expenses will be subject to income tax and a 10% additional tax.
How is an ABLE account different from a 529 education account?
How Do I Enroll in Ohio’s New Plan?
Individuals with disabilities nationwide can now enroll in Ohio’s State Treasury ABLE accounts, known as STABLE accounts. The account will allow individuals to save on a tax-deferred and tax-free basis for qualifying expenses related to the disability, including:
Before applying, there are a few additional items to keep in mind:
Residents and nonresidents of Ohio can submit an online application or learn more at www.stableaccount.com.
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