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Page 8 of 13 Fileid: … tions/p907/2022/a/xml/cycle06/source 12:00 - 5-Dec-2022
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
state's claim is reduced by the amount of all premiums aren’t an eligible individual. The earnings portion, $400, is
you paid to a Medicaid Buy-In program under that included in the taxpayer’s gross income after the calcula-
state's Medicaid plan. tion in Table 1.
Who can establish an ABLE account and what are Contribution limitation. The total annual contributions
the requirements? You may establish an ABLE account to an ABLE account (including amounts rolled over from a
if your blindness or disability occurred before age 26. As a section 529 account, but not other amounts received in
disabled individual, you may be eligible if either of the fol- rollovers and/or program-to-program transfers between
lowing applies. ABLE accounts) are limited to the annual gift tax exclusion
amount ($16,000 for 2022), plus certain employed ABLE
• You are entitled to benefits based on blindness or dis-
account beneficiaries may make an additional contribution
ability under title II or XVI of the Social Security Act.
up to the lesser of these amounts: (1) the designated ben-
• You file a disability certification under the rules of your eficiary’s compensation for the tax year, or (2) the poverty
qualified ABLE program, which will include information line amount of $12,880 in the continental United States,
regarding your diagnosis relating to your relevant im- $14,820 in Hawaii and $16,090 in Alaska. The designated
pairment or impairments signed by a physician (as de- beneficiary’s contribution limit is determined using the
fined in section 1861(r) of the Social Security Act). poverty guideline applicable in the state of the designated
You must certify one of the following. beneficiary’s residence. An employed designated benefi-
▶ You have a medically determinable physical or ciary isn’t eligible for the increased contribution limit for
mental impairment which results in marked and se- the tax year if any contribution is made on behalf of the
vere functional limitations, which (a) can be expected employee to a qualified defined contribution plan (within
to result in death, or (b) lasted or can be expected to the meaning of section 414(i)), a section 403(b) plan, or a
last for a continuous period of not less than 12 section 457(b) plan. Also, contributions may not exceed
months. an annual cumulative limit, which is the same as the
▶ You are blind within the meaning of section 1614(a) state’s section 529 qualified tuition program limit.
(2) of the Social Security Act.
What if amounts contributed to your ABLE ac-
You may choose to have someone else establish an count are greater than the annual contribution limit?
ABLE account for you. If you’re unable to establish an If amounts contributed to your ABLE account are greater
ABLE account, your agent, under a power of attorney, or if than the annual contribution limit, the excess contributions
none, your conservator or legal guardian, spouse, parent, and the earnings on those contributions must be returned
sibling, grandparent, or a representative payee appointed to the contributors. The ABLE program should do this on
for you by the Social Security Administration (SSA), in that or before the due date of your income tax return, which is
order, can establish it for you. However, only you, the des- generally April 15 (including any extensions), and must
ignated beneficiary, can have any interest in the account notify you of this action. However, it is your responsibility
during your lifetime. or the responsibility of the person acting on your behalf to
ensure that certain contributions of your compensation in-
Loss of eligible individual status. If you establish an
come are not greater than the limit and to request the re-
ABLE account and later cease to be an eligible individual
turn of any excess contributions by the ABLE program.
because, for example, your impairment goes into remis-
You're subject to a 6% excise tax on the excess contri-
sion, then beginning the first day of the next year no con-
butions and earnings that aren't returned by the ABLE pro-
tributions may be accepted by your ABLE account. If you
gram to the contributors by the due date (including any ex-
cease to be an eligible individual, then for each tax year in
tensions) of your income tax return. You figure this tax on
which you are not an eligible individual, the account will
Form 5329, Part VIII, and file it even if you're not otherwise
continue to be an ABLE account, and the ABLE account
required to file a federal income tax return.
will not be deemed to be distributed. Contributions may
resume after the impairment recurs. You should notify What if your ABLE account exceeds the cumula-
your ABLE program of any changes in your eligibility sta- tive limit? The cumulative limit for an ABLE account is
tus. set by each state’s ABLE program. If your ABLE account
Distributions from your ABLE account during a period exceeds the cumulative limit, the state’s ABLE program
you’re no longer an eligible individual aren’t for qualified will return to the contributors the contributions that caused
disability expenses and therefore are possibly subject to your account to go over the limit, and notify you of this ac-
tax. The earnings portion of a distribution (determined un- tion by the due date of your income tax return, which is
der section 72) made from your ABLE account to you generally April 15 (including any extensions).
when you’re no longer an eligible individual may be taxa-
ble. Distributions. You can take distributions from your ABLE
account to pay for any qualified disability expenses, such
Example. In 2022, the taxpayer is an eligible individual as expenses for maintaining or improving your health, in-
with $2,400 in their ABLE account. $2,000 of this is from dependence, or quality of life. Qualified disability expen-
contributions, and $400 is earnings. During 2022, the tax- ses include those for education, housing, transportation,
payer’s disability goes into remission and they are no lon- employment training and support, assistive technology,
ger an eligible individual. In 2023, a distribution of $2,400 personal support services, health, prevention and
is made to the taxpayer from the ABLE account while they
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