PLANNING MEETING WITH FAMILY/FRIENDS : TOPIC SUGGESTIONS FOR FUTURE NEEDS DISCUSSIONS cont. 

If your loved one with special needs has an ABLE account already, share this information with your family/friends and explain what an ABLE Account is.

What Is An Able Account?

ABLE (Achieving a Better Life Experience) accounts allows eligible individuals with special needs who have a disability that manifested itself before the age of 26 to open tax-advantaged savings accounts. Only one ABLE Account can be opened per eligible individual. The account can be established by the eligible dependent with special needs, or their parent, legal guardian, or agent acting pursuant to a power of attorney. ABLE accounts are developed and managed on a state level. Most states allow deposits from out of state residents so even if your state does not have the program you may still be able to sign up for another state's account.

The funds can come from either the individual with special needs or any third person (including family, friends, co-workers, Special Needs Trust, or Pooled Trust).

Income earned by the ABLE account is not taxed. Contributions must be made with post-taxed dollars and is not tax deductible for federal taxes, however, some states may allow for state income tax deductions for contributions made to an ABLE account.

Funds in a 529 college savings plan can be moved into an ABLE account without incurring

ABLE ACCOUNTS

tax or penalties if both accounts have the same beneficiary or a qualifying member of the beneficiary's family. The rollover amount must be within the annual ABLE contribution limit ($17,000 in 2023) and must occur by December 31, 2025. There are direct rollovers where the two programs transfer assets directly from one to the other. And there are indirect rollovers in which the account owner of the 529 plan would take possession of funds before they are transferred. The transfer must occur within 60 days of withdrawal.

Money from the individual with a disability's special needs trust may also be moved into their ABLE account with no tax consequences, again, while staying within the annual ABLE contribution limit.

The funds can be used for a range of expenses related to the disability of the dependent, such as education, housing, transportation, health, prevention and wellness, financial management, administrative services, legal fees, personal support services, employment training, etc. In most states, upon death of the dependent with special needs or termination of the account, there is a Medicaid pay-back provision in most states regardless of who deposited the funds. Some states are doing away with the Medicaid pay-back provision.

Annual Contributions

A total of $17,000 for 2023, plus an addi

tional $13,590 can be contributed from the earnings of the beneficiary.

If the ABLE account owner is employed and does not participate in their employer's defined contribution plan (such as a 401(k) plan, profit-sharing plan, 403(b) plan, or 457(b) plan), they may make an additional annual contribution up to the lesser of:

1. The ABLE account owner's compensation from their employer for the tax year OR
2. The United States poverty line amount in 2023 of $15,630 in Hawaii, $16,990 in Alaska, or $13,590 in all other U.S. states

Total Account Limit Maximum

The maximum accumulation amount in the ABLE account is subject to the individual state's limit, based on the state's cap for the traditional 529 Plans. The amount can range from $235,000 to $550,000 for 2023.

For ABLE account owner's receiving Supplemental Security Income (SSI), if the account combined with their other resources exceeds $100,000 there will be a suspension of their SSI until all their resources no longer exceed the $100,000 limit. However, there is no effect on benefits under the Medicaid program, even if a beneficiary's SSI is suspended because the account exceeds the $100,000 limit.

For the most current information and states that offer an ABLE Account, visit ablenrc.org

YOUR TEAM OF PROFESSIONALS

It's important to pull together a support team of professionals that can help guide caregivers through the variety of options available to plan for the future care of dependents with special needs.

The composition of the team may vary depending on your unique situation, but it should include you and your loved one with special needs, if applicable, working collaboratively with professionals

who have experience in working with special needs families, such as:

• Special needs financial professional
• Special needs attorney, and
• Perhaps a health professional and a school guidance counselor, among others.

Advise your family who will be on your "Team" to assist you with executing your plan for your loved one's future.

MassMutual SpecialCare

SpecialCare is a program created by MassMutual that provides access to information, specialists and financial solutions to people with disabilities and their families. For more information about Massachusetts Mutual Life Insurance Company (MassMutual) and its SpecialCare program, please visit massmutual.com/specialcare.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.