ESTATE PLANNING: PA ABLE SAVINGS PROGRAM QUALIFIED EXPENSES

• Thursday, April 6, 2017
• Category: Estate Planning and Estate Administration

Use Your Account To Pay “Qualified Disability Expenses”

• Education
• Housing
• Transportation
• Employment Training/Support
• Assistive Technology/Personal Support Services
• Health
• Prevention/Wellness
• Financial Management/Administrative
• Legal Fees
• Expenses For Oversight/Monitoring
• Funeral/Burial Expenses

Qualified Disability Expenses are not limited to items that are “medically necessary” and they need not be for the sole benefit of the Eligible Individual. Proposed Internal Revenue Service regulations state that basic living expenses are also qualified disability expenses.

Access Your Funds At Any Time For Any Reason

You will be able to access the funds at any time for any purpose. However, if you use the funds for anything other than Qualified Disability Expenses (a Non-Qualified Withdrawal), there may be tax consequences. The growth portion of any Non-Qualified Withdrawal will be subject to federal and state income tax and an additional 10% federal tax. Taxes are on the growth portion only not the entire withdrawal. Additionally, depending on the circumstances, a Non-Qualified Withdrawal might impact your SSI (../faqs/#benefits) or other federal and state needs-based benefits.

Documenting Your Expenses

You will not be required to submit documentation showing whether withdrawals are for Qualified Disability Expenses. However, documentation that the total withdrawals for a tax year did not exceed the disability-related expenses for that year may be required in the event of an Internal Revenue Service (IRS) tax audit. Additionally, if you are a Supplemental Security Income (SSI) recipient, you may need to provide the Social Security Administration with the details of each withdrawal. So, you should retain adequate documentation.

Reference: www.paable.gov/expenses

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