NY ABLE Account: A Savings Plan for People With Disabilities

By Kami-Leigh Agard

Named for the 2014 federal law, the Achieving a Better Life Experience Act (ABLE), and modeled after the 529 College Savings Program, the NY Able Program allows New Yorkers with disabilities to save money in their own name without risking their federal and state benefits. New York is one of 28 states in the country that offer this type of program that like a 401K, provides a variety of investment options from conservative to aggressive. The main caveats are that the annual contribution is capped at $19K (employed account holders may contribute more), and the maximum account balance cannot exceed $520K. So, why should parents and individuals with disabilities consider getting an ABLE account? This program makes it possible for people with disabilities to save and pay for extra costs associated with living with a disability without jeopardizing benefits provided through private insurances, Medicaid, SSI, even the beneficiary’s employment and other sources. Significantly, the program gives families and individuals with disabilities the ability to plan for the future.

According to an op-ed, “NY ABLE Celebrates Seven-Year Anniversary,” published last October in “City & State NY” by NYS Comptroller Thomas P. DiNapoli: “There were approximately 827,000 people with disabilities between the ages of 16 and 64 living in New York as of 2022. Many of these individuals depend on a variety of public benefits for income or to pay for health care, food or housing costs. To qualify for these benefits, such as SSI and Medicaid, individuals with disabilities are generally limited to $2,000 in assets. The NY ABLE program accounts allow eligible individuals with disabilities to save money in their own name without risking their public benefits, if certain conditions are met.”

My daughter’s dad has been the maestro when it comes to financial planning for our daughter. Years ago, he established not just a 529 College Savings account and special needs trust, but also an ABLE account to make sure that she is financially sound, long after we’re gone. Now that she’s much older, and we unfortunately don’t see college in her future, a valued option with NY ABLE accounts is that you can transfer funds accumulated in the 529 College Savings account to ABLE. Again, keep in mind that the annual contribution is capped at $19K and account balance cannot exceed $520K. However, employed ABLE account owners may contribute additional funds equal to their employment income or the federal poverty line (in NYS, it’s $15,060) for a one-person household, whichever is less.

In the same op-ed, Comptroller DiNapoli stated, “Since the launch of NY ABLE, employment for people with disabilities grew 14.4% in New York, making it even more important for these individuals to have a secure place to save their money and watch it grow.” NY ABLE account contributions are not federally or NYS tax-deductible at the state level; however, the funds grow tax-free, and withdrawals for qualified disability expenses are also tax-free. Qualified disability expenses include education, medical, transportation and housing. For example, one can use an ABLE account to pay rent or even buy a house. Users can access funds in several ways, including an optional checking account and debit card.

To be eligible to open an ABLE account, the beneficiary must have a disability that was present before age 26 (in 2026, increasing to before age 46). Qualifying conditions include: receiving Social Security benefits based on disability or blindness (SSI, SSDI, CDB, DWB), having a disability listed on the Social Security Association’s “List of Compassionate Allowances Conditions,” or a written diagnosis from a licensed physician documenting a medically determinable physical or mental impairment. Regarding NYS residency, in 2022, Comptroller DiNapoli introduced legislation removing NYS residency requirements, so people who qualify for the program can live in any state and retain their account even if they move. To open an account, you need a $25 initial deposit.

Some disadvantages of ABLE accounts are contributions are not tax deductible; distributions used to pay for qualified liability expenses are tax-free, but any distributions not used for this purpose are taxed as income; annual contributions and account balances are capped; and notably, Medicaid can reclaim any funds remaining in the ABLE account after the beneficiary’s death. (Medicaid payback is a significant consideration, as state regulations may allow Medicaid to reclaim funds from the ABLE account upon the beneficiary’s death).

For more info about NY ABLE and to apply, visit: https://www.mynyable.org/home.html

This Tuesday, September 2, from 5 p.m. to 8 p.m., Rockaway Beach Autism Families is hosting a Back to School Social at Callie’s (410 Beach 129th Street). There will be a backpack giveaway with sensory items, a sing-along with the Rock-A-Wades and more! Stop by. For more info, follow Rockaway Beach Autism Families on Facebook.