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ABLE ACT PASSES LEGISLATURE

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Earlier in the year, two Senate committees unanimously passed the Iowa ABLE (Achieving a Better Life Experience) Savings Plan Trust Act. Unfortunately, time ran out but interest in the bill did not.  With support from Senate President Pam Jochum and Senator Joe Bolkcom, the bill was added to the Senate Health/Human Services Budget (SF 505) and is now on its way to the Governor.

Congress passed the ABLE Act in December 2014 to allow individuals with disabilities to establish tax-free savings trusts into which money can be deposited to pay for future disability-related expenses that help maintain health, independence, and quality of life. Expenses could include home modifications, specialized health and dental care services, assistive technology, education, and transportation. Eligible Iowans may save up to $100,000 in an account without losing eligibility for other services, including Social Security benefits and Medicaid.  

The federal government has yet to set their rules for the program, but we know that each state must create its own program for its residents to be able to establish such savings accounts.  Our legislators did that in Senate File 505.  Under current federal gift tax limitations, as much as $14,000 can be deposited annually, with individual donor deduction caps of approximately $3,100 each. Donors will be able to deduct deposits from income taxes, and any gains are not taxed.  To be eligible, the disabling condition must have occurred prior to the age of 26.  Iowa’s program will be modeled after the College Savings Iowa 529 program administered by the State Treasurer, who received a total of $300,000 to administer the program and purchase necessary software.

We know that many of our readers were very, very excited about the ABLE Act.  Unfortunately, our state will not be able to set up its program until federal guidelines come out telling them what is and is not allowed.  Those rules are not expected until late summer or early fall, so be patient. In the meantime, our State Treasurer will be doing all he can to get ready if this legislation is signed into law.