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Modern Estate Planning Blog

Elder Law & Special Needs Planning

What Is CalABLE And How Can It Help?

November 24, 2019

The Achieving a Better Life Experience or ABLE Act was passed by the US Congress in 2014. 

The Act authorized the creation of tax-advantaged accounts for qualifying individuals with disabilities - providing a way to save money, feel more independent, and help friends and family live their best life while still maintaining eligibility for critical benefits such as SSI and Medicaid (Medi-Cal). 

In this blog, we will talk about California’s version, the CalABLE account, its benefits, and how it can help you or your loved ones. CalABLE accounts are fairly new, becoming available in December 2019. 

What Is CalABLE? 

CalABLE is a tax-advantaged account where any earnings on funds in the account are tax-free. Distributions are also tax-free, as long as they are used towards disability expenses. 

Its purpose is to enable a person with disabilities to save money and stay eligible for any public benefits they receive (SSI, Medi-Cal). With CalABLE, people with disabilities can be provided with a greater sense of independence, have the opportunity to save for items they want, or to simply put money aside in case of an emergency. 

Who Is Eligible For CalABLE?

What Is CalABLE And How Can It Help?

You are eligible for CalABLE if you can establish that your disability began before the age of 26 and you meet the eligibility for SSI or SSDI. 

You can also be eligible for CalABLE if you’re diagnosed by a qualified physician and your condition is found to be a physical or mental disability resulting in functional limitations expected to last twelve months or more. 

What Can The Money Be Used For?

The money saved in your CalABLE account can be used for any Qualified Disability Expenses (QDE). This includes anything that will improve your health or independence, such as housing, education, and transportation expenses. 

How Much Can I Put Into the Account?

Annually, you can deposit up to $15,000 total (from all sources - yours, family, friends, trust distributions) to the CalABLE account.  In addition, you can deposit up to an additional $12,140 of your earned income into the account. However, if your account balance exceeds $100,000 your benefits eligibility will be jeopardized.

How Does It Work?

How to open a CalABLE account

All accounts with CalABLE are opened online. 

When you open your account, you'll be asked to create a username and password and provide basic information such as your name, address, and birthday. 

The account can be opened by a parent, grandparent, or legal guardian of the individual with disabilities. In that case, you will need to enter your own information along with the beneficiary’s information. 

You will also need to have your bank account information or the beneficiary’s account details on hand so that arrangements can be made to transfer money to and from the account. 

There will be a few questions asked regarding the beneficiary’s disability to confirm that they are eligible to open an account with CalABLE.

Investment or Savings Options

As soon as you enter your basic information, you will be asked to make your initial contribution. This contribution will need to be a minimum of $25 and you will also be given the chance to choose your saving and investment option. 

These options will include:

  • FDIC-Insured Portfolio: Interest-bearing deposit account with low risk
  • Conservative Portfolio: Minimum interest rates guaranteed 
  • Moderate Portfolio: Minimum interest rates guaranteed
  • Aggressive Growth Portfolio: Long-term total returns based on investments in stock funds

Deposit and Withdraw Anytime You Like

Accessing your account is easy; simply log into your account and request a withdrawal or transfer money from your bank account. 

A withdrawal can be sent electronically to your bank account or you can request to receive a check for a small fee. 

What Is CalABLE And How Can It Help?

If you’re thinking of opening a CalABLE account and want to know more, visit the National Disability Institute website for more information. 

To open an account with CalABLE, click here to begin the process now. 

If you’re interested in learning more about special needs planning, please schedule a consultation by calling The Chubb Law Firm directly at 916-241-9661.

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A wonderful job! After watching my family deal with litigation after a death, this is so important for everyone, young and old.

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