IRS raises limits for ABLE ACCOUNTS:
For the first time in four years, the amount of money that people with disabilities can save without jeopardizing eligibility for government benefits is rising.
Starting this month, the Internal Revenue Service said that the federal gift tax exclusion is increasing from $15,000 to $16,000 annually. That same cap also applies to contributions to ABLE Accounts, a special savings vehicle for people with disabilities.
The increase is the first since 2018. It comes as a result of inflation, the IRS said. ABLE Accounts, which were created under a 2014 law, allow individuals with disabilities to save up to $100,000 without risking eligibility for Social Security and other government benefits. Medicaid can be retained no matter how much is in the accounts.
The interest earned on funds in ABLE Accounts is tax-free, and the funds saved can be used to pay for qualified disability expenses such as education, health care, transportation, and housing.
Annual deposits in ABLE Accounts are typically limited to the value of the IRS' gift tax exclusion, which is currently $16,000.
However, people with disabilities who are employed can also save some of their earnings in the accounts above and beyond the gift tax amount.
Need further information or clarity? Contact Kevin at kevin@kmckernan.com or 718-317-5007
