The recently enacted Omnibus Budget and Tax legislation will eliminate the state residency requirements for ABLE accounts. These accounts permit some people with disabilities to save a greater amount of money without the risk of losing Social Security and Medicaid benefits. Under the prior law beneficiaries of an ABLE account had to reside in a state that had authorized these accounts. Section 303 of the Protecting American’s from Tax Hikes (PATH) Act of 2015 will eliminate this state residency requirement. “The provision allows ABLE accounts (tax-preferred savings accounts for disabled individuals), which currently may be located only in the State of residence of the beneficiary, to be established in any State.” Individuals that are setting up an ABLE account will now have the ability to decide which state program is best suited to their personal needs. This new provision in the legislation will become effective for tax years that began after December 31, 2014.
See Jeff Marshall, ABLE Account Residency Requirement Eliminated, Marshall Elder and Estate Planning Blog, December 19, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
