Have You heard? IRS Increases Limit For ABLE Accounts
Federal gift tax exclusion has increased from $16,000 to $17,000 annually. This increase went into effect this month and is allowing people with disabilities to save more money without jeopardizing eligibility for government benefits.
Deposits are generally capped at the value of the IRS’ gift tax exclusion. But, people with disabilities who are employed can save some of their earnings in addition to the gift tax amount of $17,000. This year workers with disabilities have saved over $13,000.
ABLE accounts allow people with disabilities to save up to $100,000 without forgoing eligibility for Social Security and other government benefits. Medicaid can be retained no matter how much is in the accounts. These funds can be used to pay for qualified disability expenses including education, health care, transportation and housing, with tax-free interest.
Offered through programs in 47 states, ABLE accounts are open to individuals nationwide if they have a disability that onset before age 26. Starting in 2026, that age limit will rise to 46 under a recently passed law.
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This post originally appeared on our January/February 2023 Magazine