ABLE Accounts Open in Virginia

Newsletter | Dec 27, 2016 | Hook Law Center

For those of you who have been waiting for Virginia529 to open the enrollment process for ABLE accounts, your wait is over. The Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act was signed into law in December, 2014 and Virginia passed legislation in March, 2015 to direct Virginia529 to develop, implement and administer the new tax-advantaged savings accounts for eligible persons with disabilities. Virginia529 just opened the enrollment process this month and accounts are ready to be created and funded.

As a reminder, ABLE accounts are for blind or disabled individuals whose blindness or disability occurred before the individual’s 26th birthday and i) who are entitled to benefits under the Social Security Act (SSI or SSDI); or ii) who self-certify that they have a condition listed on the Social Security Administration’s list of compassionate allowances conditions and have a signed qualifying disability diagnosis from a qualified physician; or iii) who self-certify that they have an eligible disability and have a signed qualifying disability diagnosis from a qualified physician. ABLE accounts may be opened by the disabled individual in his/her own capacity if he or she is 18 years of age and competent to make financial decisions for him or herself. If the disabled individual cannot open the account independently, a guardian or attorney in fact acting under a valid durable power of attorney may open the account on the individual’s behalf. Parents can open such accounts on behalf of minors. All accounts can be opened online at

ABLE accounts, similar to the 529 education accounts they are modeled on, allow for contributions to grow free of federal and state income tax and for distributions for “qualified disability expenses” to be made free of federal and state income tax. A “qualified disability expense” is one which is incurred at a time when the individual is eligible (as described above), which relates to the person’s blindness or disability and which helps maintain or improve the person’s health, independence and quality of life. This standard is quite broad and can include education, housing, transportation, employment training and support, assistive technology, health, financial management, legal fees, funeral and burial expenses etc. It will be important to track and account for these expenses, because the total distributions from the account will be reported to the IRS annually. Maintaining detailed records and receipts will be an important part of administering an ABLE account. Failure to use the money in the ABLE account for a qualified disability expense (or to be able to prove such expense) will subject the withdrawal to a 10% penalty and the individual will include the amount of the withdrawal in his or her income. It is also possible that such non-qualified funds could be counted as income or as a resource for means-tested benefit programs. An important side-benefit of contributing to an ABLE account is that Virginia allows an income tax deduction of up to $2,000 per contributor.

ABLE accounts are limited in some very important ways. Contributions to an ABLE account are limited to the amount of the annual gift tax exclusion, currently $14,000/year. This limit applies to contributions from all sources, so the account cannot be used to shelter large sums of money. Furthermore, upon the death of the disabled individual, any balance in the ABLE account is subject to payback to Medicaid for funds paid by Medicaid on behalf of the disabled individual after the creation of the account. Finally, for disabled individuals collecting SSI, balances in an ABLE account in excess of $100,000 are counted as an asset for determining eligibility for SSI (but not for Medicaid eligibility). Although Virginia currently has a ceiling of $500,000 on the assets that can be in an ABLE account, ABLE accounts are not a substitute for Third-Party Special Needs Trusts or for First-Party Special Needs Trusts because of the limitations on annual contributions and the Medicaid payback requirement. However, they can function very well as an adjunct to a well-conceived plan to care for individuals with disabilities. An ABLE account can be a way to provide independence for some individuals who are able to manage their own financial affairs and may be an excellent repository for unexpected inheritances or for extra savings.

If you would like to discuss how to utilize an ABLE account in your planning for a person with disabilities, contact one of the experienced attorneys at the Hook Law Center so we can help you make sense of possibilities.

Ask Kit Kat – Sea Turtles in Danger

Hook Law Center:  Kit Kat, what can you tell us about sea turtles in the Outer Banks and how they are faring during this cold patch of weather?

Kit Kat:  Well, the sea turtles who overstayed their normal residency in the Outer Banks are having quite a time this winter. Temperatures have been unusually cold. Even though, the cold snaps don’t last for days on end, they are still a danger to these warm-water, loving creatures. According to Jeff Hampton of The Virginian-Pilot, “turtles cannot move when water temperatures fall below 50 degrees.” Most have left the area by now, but a few get fooled by a warm fall, and forget to  leave to go south for the winter. Fortunately, for them, they got delayed in the right place to get expert treatment!

8 green sea turtles, one loggerhead, and one Kemp’s ridley turtle were rescued from the beaches of Pimlico Sound over the weekend of December 10-11, 2016. They were rescued by staff from the North Carolina Aquarium-Roanoke Island, volunteers from the Hatteras Network for Endangered Sea Turtles, and rangers from the National Park Service. The turtles were then treated at the aquarium’s rehabilitation center. It’s a slow process. They are gradually warmed by a rate of 5 degrees per day, until reaching their normal body temperature. The treatment involves administering fluids and analyzing their blood. Some even require antibiotics if they happen to also catch pneumonia. Once they are stabilized, they are released to a beach further south, but they must first be able to swim and eat normally.

This current rescue effort was quite small compared to last year. At that time, the rescue teams were overwhelmed with the number of  turtles needing care when caught in a prolonged cold snap. Rosemary Lucas, coordinator of the rehabilitation center, said they had tubs of warming water all over the center—even in hallways and bathrooms. Contributions from the community help in these efforts. If you would like to donate to this cause, you may do so online at with the code SEATURTLE2016.  Contributions by check may be sent to NC Aquarium, 374 Airport Rd., P.O.Box 967, Manteo, NC 27954 with the notation of STAR or SEA TURTLE in the subject line. (Jeff Hampton, “Stunned by the cold,” The Virginian-Pilot, December 14, 2016, p. 4)

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