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Week #3: What Can Funds Be Used For?

 

Understanding What ABLE Funds Can be Used For

Funds in the account can be used to purchase “qualified disability-related expenses.” A “qualified disability expense” is any expense related to the designated beneficiary’s blindness or disability that assists him/her in increasing and/or maintaining their health, independence and/or quality of life. These may include expenses related to education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses. 

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Topic at a Glance

What can funds in an ABLE account be used for?

Funds in an ABLE account are meant to be used to off-set the costs assocatied with living with a disability. The funds are meant to assist a person in the purchasing of "qualified disability expenses".

What are "Qualified Disability Expense"?

A “qualified disability expense” is any expense related to the designated beneficiary’s blindness or disability that assists him/her in increasing and/or maintaining their health, independence and/or quality of life. These may include expenses related to education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other disability related expenses that the beneficuary might incur as a result of having a disability.

Who is responsible for ensuring that the ABLE funds are being used appropriately?

The IRS is responsible for ensuring that funds in an ABLE account are being used appropriately.  We suspect they will do this by conducting period audits.

Should I keep records of the qualified disability expenses paid for by my ABLE account?

We do recommend that you save the receipts of your purchases in case your expenditures are ever questioned by the IRS. Some ABLE programs even have ways to track your spending online.  We also recommend that you consider keeping record of how that particular expense is related to your disability and how it helped you increase or maintain your health, independence, and/or quality of life. This may come in handy if you’re ever audited by the IRS.

What happens if I spend ABLE funds on a non-qualified expense?

It is important to keep in mind that misuse of the funds in an ABLE account will result in tax implications and penalties and could affect the beneficiary’s eligibility for public benefits.

Resources

View ANRC's informational videos

Stay Tuned

Register for our "Understanding Qualified Disability Expenses" webinar

This webinar, sponsored by BNY Mellon, will detail what funds in an ABLE account can cover, such as housing, transportation, job training, education and more.  Actual or soon-to-be ABLE account holders will discuss what they plan to use their ABLE accounts for, and some ABLE program administrators will discuss which types of expenses would be considered “qualified disability expenses” and how this will be determined.

Click HERE for more information, including how to register.

Read a transcript from our "Ask the Experts"

The ABLE National Resource Center is always ready and willing to anwser your ABLE related questions to the best of our ability.  If you have a question or comment please click HERE to submit your question or comment and we promise to get back to you as soon as possible.

View our Friday Fast Facts

Fast Fact Friday: ABLE funds must be used for the purposes of purchasing qualified disability expenses.

Fast Fact Friday: The IRS is responsible for making sure ABLE funds are being used correctly

Fast Fact Friday: Misuse of ABLE funds will result in tax penalties and could affect a the beneficiary’s  eligibility for public benefits.