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Kevin O'Flaherty

In this article, we will explain Illinois ABLE Accounts.  

What is an ABLE Account?

The Federal Achieving a Better Life Experience (“ABLE”) Act allows for tax advantaged bank accounts known as ABLE Accounts that can be used by individuals with disabilities to save money without decreasing the amount of their government benefits such as Supplemental Security Income (“SSI”).  Although the ABLE Act is a federal law, each state in which ABLE Accounts are available has its own rules for how ABLE Accounts in its jurisdiction work.  

Many individuals with disabilities receive means tested government benefits.  This means that the benefits only continue as long as and to the extent that the disabled individual’s assets or income are below a certain threshold.  

Illinois ABLE Accounts and Supplemental Needs Trusts are two tools that we can use to allow individuals with disabilities to earn income and save money without reducing their government benefits.  For more information on how ABLE Accounts and Supplemental Needs Trusts work together in planning for special needs, check out our article: Illinois ABLE Accounts and Special Needs Trusts.

What Are the Eligibility Requirements for Illinois ABLE Accounts?

What Are the Eligibility Requirements for Illinois ABLE Accounts?

Beneficiaries of an ABLE Account must be legally disabled and must have been disabled prior to age 26.

What Types Expenses Can You Use ABLE Accounts For in Illinois?

If ABLE account funds are used for “Qualified Disability Expenses” the funds receive tax advantaged treatment and do not negatively impact government benefits.  Qualified Disability Expenses include a wide range of expenses related to the owner’s disability or blindness including education, housing, transportation, employment training and support, assistive technology, and personal support services.  

What Are the Tax Benefits of an ABLE Account?

ABLE account contributions are made with post-tax dollars.  However income frome earned from the funds in the account is not taxed, and distributions for “Qualified Disability Expenses” are not taxed.

How Much Can I Contribute to an Illinois ABLE account annually?

How Much Can I Contribute to an Illinois ABLE Account Annually?

The maximum annual contribution to an Illinois ABLE Account is the same as the Federal gift tax exemption.  In 2018 this amount is $15,000.00

What is the Maximum Account Balance for Illinois Able Accounts?

The maximum account balance for an ABLE Account in Illinois is $350,000.00.  However, if your ABLE Account balance exceeds $100,000.00, any amounts over and above $100,000.00 will impact your means test for Supplemental Security Income (SSI).  

What Happens to Illinois ABLE Account Funds When the Owner Dies?

When the owner of an Illinois ABLE Account dies, any remaining funds in the ABLE Account are applied in order to the following:

  • Payment of outstanding bills for Qualified Disability Expenses, including funeral expenses;
  • Payment to Medicaid to pay back Medicaid for any benefits received by the ABLE Account owner; and
  • Distribution to the owner’s legal heirs and beneficiaries.  

The Bottom Line

Illinois ABLE Accounts are a new tool that can be implemented in your special needs planning.  However, you should work with a professional in order to determine whether an ABLE Account, a Supplemental Needs Trust, or a combination of both will be the best fit for your individual goals, as well as how income and assets should be allocated between the two vehicles.  

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.


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