No, tax benefits for ABLE accounts and 529 plan accounts are aggregated for tax purposes by contributor, not by ABLE account or 529 plan. Anyone who contributes to one or more ABLE accounts or 529 plans with beneficiaries under the age of 21, can receive tax benefits up to the maximum allowable amount for that tax year. Contributions to an ABLE Account with a Beneficiary under the age of 21 are deductible for Oregon income tax purposes up to annual limits. For 2019, the State Tax Deduction is $4,865 for taxpayers filing jointly and $2,435 for single filers. Earnings on contributions of participants are exempt from state income taxation. There is no Oregon state income tax on Qualified Withdrawals or Rollovers.
One of the main benefits of having an ABLE account is being able to save for eligible expenses and invest for the future in a tax-advantaged account. As long as your balance stays below the $100,000 SSI limit, you can keep your SSI benefits and still qualify for Medicaid and other federal benefits (regardless of the amount saved in your account). Other benefits include a prepaid card to use for eligible expenses and a simple and intuitive online platform to manage your account.Best of all, the account grows tax free in addition to receiving state tax benefits for ABLE accounts and 529 plan accounts. For 2019, the deduction is $4,865 for taxpayers filing jointly and $2,435 for single filers.
As long as the money in your ABLE account is used for eligible expenses, it won’t be counted as income for your state or federal taxes. If a purchase doesn’t qualify as an eligible expense, you’ll have to pay taxes and a 10% penalty on the amount. If you want to know more about the IRS regulations, you can find info here.
An ABLE account won’t replace a Special Needs Trust or Pooled Trust. There are some key differences that are meant to give people with disabilities and their families more options.With an ABLE account: There are less expenses than setting up a trustThe beneficiary owns the funds and can access them for eligible expensesEarnings are tax-free advantagedThere’s a yearly limit of $15,000 and a lifetime maximum of $400,000Funds can be used for housing without affecting benefitsWith a Special Needs Trust or Pooled Trust: You have to set up a trustThe beneficiary has to get approval of the trustee to receive a disbursementThe earnings are taxed at trust ratesThere are no limits on contributions or balancesAmounts in a Third-Party Special Needs Trust are generally not subject to a Medicaid ...
The state of Oregon created the Oregon ABLE Savings Plan, a unique plan designed to help people with eligible disabilities in Oregon save for qualified expenses and invest for the future in a tax-advantaged account ‒ without losing federal or state benefits (like SSI, SSDI, Medicaid, SNAP, TANF, HUD Assistance, Section 8, etc.).
Millions of people with disabilities rely on public benefits and federal programs such as SSI, SSDI, Medicaid and others for their living and basic needs, but even those benefits can be limiting. Those receiving much needed benefits, like SSI (Supplemental Security Income), are restricted to having only $2,000 in assets, which means they are probably pinching pennies to get by. The Stephen Beck Jr. Achieving a Better Life Experience Act, known as the ABLE Act, was passed by Congress in 2014 to help people save for the costs of living with a disability and invest for the future in a tax-advantaged investment account without losing their benefits.