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HOTMA — ABLE Accounts
OHFA continues to receive questions on ABLE accounts. All owners/management agents are reminded of the following:
- ABLE accounts allow states to establish and maintain a program under which contributions may be made to a tax-advantaged ABLE savings account to provide for the qualified disability expenses of the designated beneficiary of the account. The designated beneficiary must be a person with disabilities that began prior to that person’s 26th birthday.
The entire value of the individual’s ABLE account will be excluded from the household’s assets. This means that interest on the ABLE account balance will not be counted as income whether it’s actual or imputed asset income. HUD also clarified that distributions from an ABLE account are also not considered income.
Exceptions:
- All wage income received is included as income — even the parts that are deposited into an ABLE account.
- HUD has determined that if someone other than the designated beneficiary contributes directly to an ABLE account, that contribution will not be counted as income for the designated beneficiary.
Example #1
A beneficiary of an ABLE account has a portion of their wages directly deposited into an ABLE account. All wage income received, regardless of which account the money is paid, is included as income. Employer contributions to the ABLE account are excluded. The designated beneficiary then deposits some of their wages into the ABLE account. That deposited amount is not included in the household ’s asset calculation or counted as income again when the beneficiary receives a distribution from the account.
Example #2
If a relative provides a recurring gift of $175 per month directly to a resident, the recurring gift is counted as income. However, if said relative also deposits $175 monthly directly into the resident’s ABLE account, then the additional $175 per month is not counted as income.
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