What is a 529 ABLE Account in Utah?

While we all struggle with various problems and challenges, those who have government recognized disabilities have day-to-day challenges that can be quite difficult. From mental impairments to physical ailments to neurological conditions, or even vision loss, the variety of disabilities (and their severity) is extensive. However, they often share one thing in common: Increased financial strain.

Whether you have disabilities yourself, are a care giver/guardian of a person with disabilities, or have loved-ones in either of those categories, you may be familiar with the difficulties that come with providing the proper care to an individual with specific needs. While the government offers financial-aid programs such as Social Security Disability Income and Supplemental Security Income, programs such as these can be quite restrictive. The required compliance to such programs often adds additional layers of complexity to an already challenging situation. However, there are tools available that may be able to help you circumvent some of the difficulties that arise in situations involving caring for yourself or others with disabilities. The 529 Able Account is one of those tools.

What is a 529 ABLE Account?

Established from its foundation in federal code[1], Utah’s Achieving a Better Life Experience (ABLE) Program is designed to allow “families and individuals with disabilities the opportunity to create tax-advantaged accounts to help maintain health, independence, and quality of life”[2]. A properly set up ABLE account can give qualified persons an excellent way of generating long term investment returns and allow for a healthy reserve of savings to be maintained without interfering with other government benefits.

Eligibility Protection

Possibly the most significant benefit of an ABLE Utah account is that money invested in this specialized account does not jeopardize your eligibility for other welfare programs. As you may know, government assistance programs for individuals with disabilities can be double-edged swords at times: You may have had to pass up on potential opportunities or financial gains in order to maintain that eligibility. With a 529 ABLE account, the funds stored in the account won’t count against your qualification for such programs. By investing income, gifts, inheritances, and other avenues of revenue into an ABLE account, one could create a safety net that gives increased financial security and peace of mind in addition to any benefits already being received.

To be clear, the money put into an ABLE account is subject to taxation; although, “Individuals may claim a credit for 5% of the total contributions they make to a Utah resident’s ABLE Utah account”[3] . But once funds are invested into an account, any increase and returns generated by the account, and funds withdrawn from the account will not incur taxes. The sum of the account will not work against the account holder’s eligibility for other programs as well.

Tax Free Gains

An ABLE Account is not a savings account with a fancy name. Regular savings accounts generate negligible returns, if any. Rather, an ABLE account is an investment account from which you can make deposits and withdrawals for qualified expenses without additional fines or fees[4]. Account holders (or the representative of the individual) will pick several investment options when they open the account; whenever money is put into the ABLE account, it is automatically invested in the pre-determined investment options. Gains made from the investments are not subject to taxation[5]. This is how long-term, tax-free gains can be realized via a 529 Utah ABLE account. Better yet, an individual is free to withdraw funds for their disability needs, without extra fees or costs. Individuals can use funds from the account to pay for qualified expenses such as, but certainly not limited to, home or rent expenses, health/medical bills, food, or education expenses. How much can a person contribute to their ABLE account per year? The limit for ABLE account contributions is $16,000; this cap can jump up to $28,880 per year if you are employed and qualify[6]. It is important to note, however, that an account in excess of $100,000 will affect SSI Benefits. In addition, funds held in an ABLE account are subject to recovery by the state upon the death of the ABLE Account holder, up to the amount the state contributed to the disabled persons care.

Knowledgeable, Expert Estate Planning

How does the 529 ABLE account relate to estate planning practices? An ABLE account could be incorporated as a possible provision for a special needs trust, will, or other estate planning document. While resources such as this type of account can be extremely helpful, often times they are often under-utilized or altogether ignored by individuals or firms not specialized in estate and trust planning legal matters.

If you or a loved one you know would benefit from a special needs trust and estate planning, our experienced attorneys are here to help. Call or click to schedule an appointment, and experience the peace of mind quality estate planning brings.


[1] 26th Title of the United States Code, Section 529A

[2] Stable Account. What is an ABLE Account? 2022. https://ableut.com/stable-account/

[3] Benefits, https://ableut.com/benefits/

[4] What is an Able Account? 2022. https://ableut.com/stable-account/

[5] Benefits, https://ableut.com/benefits/

[6] ableut.com, State of Utah

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