This January marks the third anniversary of my launch of Iowa’s Achieving a Better Life Experience plan (IAble), Iowa’s very own ABLE program! IAble helps individuals with disabilities and their families save for qualified expenses while also protecting their eligibility for federal benefits. With IAble, families can save up to $15,000 each year for qualified disability expenses such as housing, education, transportation, assistive technology costs and more. Since IAble’s launch in January 2017, I’m pleased to say 659 accounts are now open with more than $4 million in assets for those accounts. I’m extremely encouraged to see the growth in the program and that individuals with disabilities, as well as their families and friends, are contributing towards their financial goals.
Prior to the ABLE Act’s passage in December 2014, Americans with disabilities risked losing their federal Supplemental Security Income (SSI)and Medicaid benefits anytime they saved over $2,000 in their own name. Under these circumstances, Stephen Beck, Jr. set out to find a way for his daughter with Down Syndrome to save for the additional expenses that come with living with a disability, including her future medical expenses, specialized education and ongoing supports. Beck’s subsequent plan became the basis of the ABLE Act, which created tax-advantaged savings accounts for people with disabilities and their families that do not jeopardize eligibility for federal and state disability benefits.
My initial goal after the ABLE Act’s passage was to create a plan in Iowa that would allow families the opportunity to plan for the future well-being of a loved one with a disability. My goal now is to continue to expand the field of people who qualify for an ABLE plan by encouraging the passage of the ABLE Age Adjustment Act in Congress.
Currently, only individuals who were diagnosed with a disability before the age of 26 are eligible for an ABLE account. Based on current legislation, Americans who develop disabilities later in life are unable to benefit from an ABLE program, possibly leaving out veterans and diagnoses such as multiple sclerosis, ALS and paralysis. Legislation at the national level has been proposed to raise the ABLE Act’s age restriction from 26 to 46 years of age. If we can raise the age cap for eligibility, I know even more families would open accounts and benefit from the advantages of saving with an ABLE account.
I know the main priority when saving with an IAble account is to save for disability-related expenses while protecting eligibility for assistance programs, but any Iowa taxpayer who contributes to an IAble account, not just the account owner, can also take advantage of the state tax benefits by deducting up to $3,439 in contributions from their 2020 adjusted gross income.* Plus, earnings on these accounts work similar to college savings plans and are tax free when used for qualified expenses.**
As we celebrate the anniversary of the IAble program and its success, I encourage you to contact your federal representatives and ask them to cosponsor the ABLE Age Adjustment Act. Together, we can initiate a change and ultimately impact more lives.
About the Author: Iowa State Treasurer Michael Fitzgerald is the administrator of Iowa’s ABLE Savings Plan Trust and IAble.
* If withdrawals are not qualified, the deductions must be added back to Iowa taxable income. Adjusted annually for inflation.
** Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as applicable state and local income taxes.