The MiABLE 529 (A)
Michigan has now completed the set-up and launched the disability savings program called the ABLE Act or MiABLE 529 (A). The ABLE Act stands for Achieving A Better Life and allows for a federal tax-deferred savings option for disabled persons in the State of Michigan.
If you have a child of family member with an official assesment of Autism then I would suggest to get involved in the MiABLE 529 right away. This is super important to recieve tax-deferred options and not create potential conflict with public assistance and payments. The MiABLE also allows your friends and family the ability to make tax-deferred donations and gifts into the account rather than buy waht I call “guilt gifts” for holidays and birthdays. This are benifical gifts that will be needed and used for your child with autism. May as well use the system to your advantage.
On Tuesday November 1st 2016 in Lansing , MI Lt. Governor Brian Calley introduced the MiABLE Act registration process to the State of Michigan members and provided sign-up for the program. The federal ABLE Act was signed into law in December 2014. The Michigan ABLE (MiABLE) was signed into law in October 2015.The MiABLE program is maintained by the Michigan Department of Treasury after the state was unable to find any financial companies that wanted to manage it in the fall of 2015.
This allows families like mine with Autism to save for lifelong disability-associated costs. You can read more about the bill here for the State of Michigan MiABLE 529 Program.
The Achieving a Better Life Experience (ABLE) Program
ABLE was created to encourage and assist individuals and families in saving funds for the purpose of supporting individuals with disabilities to maintain health, independence and quality of life. The Michigan ABLE Act helps to provide secure funding for qualified disability expenses on behalf of designated beneficiaries with disabilities. These ABLE Program benefits will supplement benefits provided through private insurance, the Supplemental Security Income (SSI) program, the Medicaid program, the beneficiary’s employment and other sources. The ABLE Act passed will not interfere with other public and private benefits or make on on disability disqualified.
The federal ABLE Act was signed into law in December 2014. The Michigan ABLE (MiABLE) was signed into law in October 2015.
Opening a MiABLE 529 (A) Disability Savings Account
The Michigan Department of Treasury’s Student Financial Services Bureau recently entered into an agreement with TSA Consulting Group for the management, administration and investment services for MiABLE.
Who qualifies for a MIABLE 529 (A) Account?
The Michigan ABLE Act limits eligibility to individuals with significant disabilities (including mental health conditions) developed before turning 26 years of age. This means you don’t have to be under the age of 26 as long as you have documentation that proves onset of disabilities before age 26. An autism diagnosis is considered a life-long disability in the State of Michigan and qualifies for the MiABLE 529 (A) program.
What does a MiABLE 529 (A) do?
The MiABLE 529 (A) law allows certain people with disabilities to have special savings accounts for disability-related expenses without losing eligibility under SSI, Medicaid, and certain other public benefits.
An ABLE account must be used for “qualified disability expenses” that relate to the designated beneficiary’s blindness or disability and are for the benefit of that beneficiary in maintaining or improving his or her health, independence or quality of life. Internal Revenue Code, Section 529(e)(5), lists the following as qualified disability expenses:
- employment training and support
- assistive technology and personal support services
- health; prevention and wellness
- financial management and administrative services
- legal fees; expenses for oversight and monitoring
- funeral and burial expenses
- and any other expenses that may be identified from time to time in future guidance published in the Internal Revenue Bulletin.
Expense payments from an ABLE account are referred to as “distributions” in the federal ABLE Act and legislation. A distribution for housing expenses from an ABLE account would be considered a resource when determining eligibility for SSI and could affect the designated beneficiary’s Medicaid benefits.
A Qualified Disability Expense is:
- An expense you incurred when you were an Eligible Individual.
- The expense relates to your disability.
- The expense helps you maintain or improve your health, independence, or quality of life.
- Any expenses related to the eligible individual’s blindness or disability that are made for the benefit of the eligible individual who is the designated beneficiary, including the following expenses:
Who can contribute to a MiABLE 529 (A) Account?
Anyone can make tax-deferred contributions to a person’s ABLE Account. As an example as a birthday or holiday gift instead of purchasing a gift a financial contribution can be made to a persons’ MiABLE 529 (A) Account.
What expenses qualify under the MiABLE 529 (A) program?
A “qualified autism disability expense” means any expense related to the designated beneficiary as a result of living a life with disabilities. These include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses described in regulations by the Treasury Department. It’s best to consult with your financial advisor or accountant to understand the parameters to work within for the ABLE program.
Is ABLE different from a Special Needs Trust or Pooled Income Trust?
An ABLE Account will provide more choice and control for the beneficiary and family. The cost of establishing an account will be considerably less than either a Special Needs Trust (SNT) or Pooled Income Trust. With an ABLE account, account owners will have the ability to control their funds and, if circumstances change, still have other options available to them. Determining which option is the most appropriate will depend upon individual circumstances. For many families, the ABLE account will be a significant and viable option in addition to, rather than instead of, a Trust program.
What are the MiABLE 529 (A) tax advantages?
Distributions from an ABLE account, including any earnings, are not taxed if used for qualified disability expenses. If a distribution is not used for a qualified disability expense, that amount could be subject to income tax and imposed a 10 percent penalty. MiABLE 529 distributions not used for qualified disability expenses could also affect other benefits. For federal income tax purposes, the ABLE owner should keep careful records when funds are withdrawn. Contributions to MiABLE accounts are deductible for up to $5,000.00 for a single return and $10,000.00 for a joint Michigan Income Tax return.
How much money can I save in a MiABLE 529 (A) account?
There is an annual limit on the total amount that can be paid into an ABLE account. Annual deposits (contributions) to an ABLE account cannot exceed the individual gift tax exclusion in effect for the calendar year in which the contribution is made (in 2015, the amount is $14,000). The maximum contribution limit for all Michigan 529 plans combined for a designated beneficiary is $500,000 – this includes any 529 prepaid tuition or college savings accounts the beneficiary may have. The first $100,000 in an ABLE account would not be considered a resource when determining eligibility for SSI. If the account exceeds $100,000, the designated beneficiary could lose their monthly SSI cash payment but would continue to receive Medicaid benefits.
So it is beneficial to have the MiABLE 529 work with your disability trusts so they never exceed $100,000 and possible threaten public benefits.