We all know how important it is to save for the future, but sometimes it’s difficult to figure out where to start. Luckily, there is a new solution for people with disabilities and their loved ones to begin saving and investing. Ohio’s new STABLE Accounts are exclusively for people with disabilities and are a simple and easy way to get started!
What is a STABLE Account?
An Ohio STABLE Account is a tax preference account, meaning the individual, family members and friends contributing to the account will not be taxed by the federal government on the earnings as long as the money is used on qualified expenses. Think of it as an investment account (like a retirement account) run through the Ohio Treasurer’s Office.
More information on the history of STABLE Accounts can be found here.
Who qualifies for a STABLE Account?
To be eligible, the individual must have developed their disability before the age of 26 as well as meet one of the following criteria:
- Receiving Social Security Disability (SSDI) or Supplemental Security Income (SSI) benefits
- Have a condition listed on the Social Security Administration’s List of Compassionate Allowances Conditions
- Medically determined physical or mental impairment which resulted in functional limitations with a written and signed diagnosis from a licensed physician.
Click here for more details on eligibility.
Are there any rules to opening a STABLE Account?
Yes. There are a few rules for STABLE Accounts.
- Only one account can be opened in a beneficiary’s name, and accounts can only be open under the name of the eligible person with a disability, not a parent or guardian. However, parents, guardians, family and friends can all contribute to this one account.
- Maximum yearly contribution is $14,000, with the maximum account value limited to $426,000.
- 10% additional tax penalty will be taken on funds that are withdrawn for non-qualified expenses.
What expenses can a STABLE Account be used for?
These funds can be used for anything that will help maintain a high quality of life. Some examples include:
- Employment Support
- Help prevention and wellness
- Assistive Technology
- Financial Management
- Home Improvement Modification
Learn more about qualified expenses here.
How does a STABLE Account work?
People with disabilities, guardians (parents if the individual is under 18) or holders of a power of attorney can open an account online. A contribution of $50 to the account is required when opening. From there, you can set up your bank account information so you can transfer money electronically to and from your STABLE Account. You can also choose an amount to be withdrawn from the account that will be placed on a loadable debit card. When you open your account, you will be asked to select from five investment options, which can be changed biannually. Money can be deposited or withdrawn at any time and your balance is FDIC insured. There is a $30 annual fee to maintain the account.
Read more about how STABLE Accounts work here.
Will federal benefits be impacted? Will funds be impacted if a parent or guardian passes away?
No. Medicaid benefits and other federal benefits will not be impacted. SSI benefits are only impacted if the account balance is over $100,000. Also, wages still count as income for SSI purposes even if wages go into the STABLE Account. And no, since the account is in the individual’s name, a parent or guardian’s death will not impact the funds in the account.
More details on benefits can be found here.
Just putting a little away every month can go a long way over the years. Also, don’t forget to chat with your SSA about STABLE Accounts. Our SSAs can provide you with even more details and can walk you through the steps to set up an account.
Ready to sign up today? Visit Ohio Treasurer’s website to get started.