Achieving a Better Life Experience (ABLE) accounts now available in Minnesota

 By Ellen A. Kvenild | Monday, November 13, 2017

Minnesota has a new type of tax-advantaged account available for those impacted by a qualifying disability prior to their age 26 called an Achieving a Better Life Experience (ABLE) account. ABLE accounts were first implemented as law in 2014 but just recently became available as a state-sponsored plan in Minnesota. This account can be used in conjunction with a Special Needs Trust or as a stand-alone savings vehicle, but you can only have one ABLE account at any time. ABLE accounts are meant to be an easier and less costly way for people with disabilities to save for their future. Many disabled people want to work but often had a disincentive to do so as their income could negatively impact their government benefits. The ABLE account allows them to save that income without negatively impacting their benefits. 

ABLE accounts allow individuals the ability to save up to $14,000 each year without impacting their Medical Assistance (MA) or Supplemental Social Security Income (SSI). However, the total account value must remain under $100,000 or their SSI could be negatively impacted. The $14,000 annual contribution can be earned income or gifted money. There are some rules on how the money can be spent, but it is not just for medical purposes and appears to give more flexibility than a Special Needs Trust. If the money is used for a qualified expense all gains on the money are non-taxable. The earnings on withdrawals for non-qualified events are subject to tax and penalty.

When the beneficiary of the ABLE account passes away, federal law allows Medicaid agencies to seek reimbursement for any services that were received during the life of the ABLE account. Anything in excess of this amount would go to the beneficiary’s estate.

Minnesota’s new sponsored plan is called the MinnesotAble plan and there are a variety of investment options available. You can sign up for the Minnesota plan here.  You can use any state-run ABLE account and are not required to use the Minnesota plan.   You can read about other options here and the National Down Syndrome Society has a helpful frequently asked questions piece  here.  As always, we recommend consulting with your attorney to see if this type of account may be of benefit to you.