Certified Public Accountants & Strategic Advisors


RSSM Alert

Social Security Statements and The ABLE Act

Dear Clients and Friends of the Firm:


During the early part of the year, people began receiving 1099's, W-2's and other tax information forms.  Many of you also received Social Security statements reflecting your annual earnings for future social security benefits.  Questions that often come up when one reviews their social security schedule are:  (1)  Is the earnings statement correct and,  (2)  Does it make sense to defer benefits to age 70 or should an individual apply for social security before the age of 70?


The first answer, since social security payments are directly correlated to earnings, one should reconcile such amounts against previous tax returns.  The answer to the second question is as follows:  It should be highlighted that there is absolutely no additional benefit to defer social security payments past the age of 70.  However, at age 70, one would receive the maximum benefit. Effectively, each year one delays before age 70, percentages increase by approximately 8%.


Here is an example:  Let's say an individual is receiving $1,000 per month at age 66.  If he/she delayed receiving benefits until age 70, then at age 67 the $1,000 would increase to $1,080.  At age 68, it would increase to $1,160, at age 69 to $1,240 and finally, at age 70 it would increase to $1,320.  Although, the amount did not go up percentage-wise from the previous year by 8%, there were substantial increases resulting in a 32% increase, or 8% per annum on the original $1,000 base year.


Of course, the decision as to when to start collecting social security benefits is based upon many individual factors.  We merely wanted to present some ideas for thought and would be happy to discuss further for anyone who is interested.  A detailed analysis and more information may be accessed through the Social Security Administration's website ( 


Additionally, the federal government recently enacted a new law, The Achieving a Better Life Experience Act ("ABLE").  ABLE will allow people with disabilities, who became disabled before reaching age 26, to accumulate up to $14,000 annually in a tax-free savings account without affecting their eligibility for government benefits.  Previously, the limitation was $2,000 without forfeiting eligibility for government programs like Medicaid and Supplemental Security Income ("SSI"), unless there was a properly established Special Needs Trust.  For those covered by Medicaid in New York State the asset limit for 2015 is $14,850.


The ABLE law will permit tax-free savings accounts to pay for qualifying expenses such as, but not limited to, costs of treating the disability, education, housing and health care.  The individual will not have his/her SSI or Medicaid benefits reduced provided that the account does not exceed $100,000.  If the account does extend beyond the $100,000, benefits will cease and personal funds will have to be used in order to bring the balance below the limit.


Since this law was enacted in 2015 all of the federal and state regulations must still be adopted.  The account being set up under the ABLE Act will be similar to the traditional 529 tuition savings account and will be referred to as "529A" accounts.  The deposits into the accounts will not be deductible but the growth will be tax-free.


This law and the account established under it do not displace the need to create a proper Special Needs Trust for the disabled person.  


Should you have any questions or require any assistance, please feel free to contact us at 212.303.1800 or via e-mail at