As a general rule, those persons collecting Supplemental Security Insurance (SSI) benefits can have only limited financial resources before losing those monthly payments. The value of these resources is very low, no more than $2,000 in savings. This does not provide SSI recipients much cushion for addressing emergencies which always come along in life.
Are You ABLE?
One way around this is to open an Achieving a Better Life Experience (ABLE) account. These accounts allow SSI beneficiaries to save money in excess of $2,000. The SSI recipients can withdraw money from their ABLE accounts to pay for disability-related expenses. These can include things like education and job training. Such withdrawals are not subject to income taxes.
Three Important Changes
The tax cut that Congress passed this year made three notable changes to ABLE accounts.
• People contributing to ABLE accounts can now get a Saver’s Credit on their taxes. A tax credit is a dollar for dollar reduction in a tax bill. This makes credits more valuable than deductions.
• People can transfer funds from their ABLE account into IRS 529 accounts, without paying taxes.
• People could potentially put their entire salary into an ABLE account, up to $12,140.
Get Good Advice Before Acting
Before setting up an ABLE account, please consult with an accountant or lawyer. Like all tax laws, this one is complicated with plenty of nuances. A misstep could have consequences, like losing your SSI benefits, and even your health insurance.
