New Hampshire ABLE Accounts and 2018 Changes

Attorney Alyssa Graham Garrigan

July 2018

New Hampshire's ABLE Account Program is now open for enrollment. ABLE accounts are savings accounts that allow disabled individuals to have savings that will not disqualify the beneficiary from eligibility for government benefits, provided that certain requirements are met. For more about these accounts, see our March 2015 blog post, New ABLE Accounts Allow Savings for Special Needs Individuals. While the federal law allowing ABLE accounts was passed in 2014 it has taken time for individual state programs to get up and running.

New Hampshire's program, Stable NH, is a closed program only open to individuals living in New Hampshire. Currently, the investment managers for New Hampshire's program are Vanguard Group, Inc. and Fifth Third Bank, offering five investment options. New Hampshire's program also offers a STABLE loadable debit card. The debit card comes with an online portal that tracks all transactions and allows users to categorize and write notes on qualified expenses for the purposes of record keeping. If someone had previously set up an ABLE account with another state and now wishes to roll it over to a Stable NH account it is possible to do so. Information about Stable NH can be found here: www.stablenh.com.

2018 has also brought several changes to ABLE account programs generally. First, the annual contribution limit for ABLE accounts has increased. The contribution limit is tied to the annual gift tax exemption, which is indexed for inflation. In 2018, the contribution limit increased from $14,000 to $15,000. Additionally, ABLE account owners who are employed and choose to contribute to their own ABLE account can contribute above the $15,000 annual contribution limit, up to an additional $12,060 (depending on their income). These additional amounts are limited to contributions made by the account owner. Additionally, the account owner must not be covered by an employer's retirement saving plan.

ABLE account owners who contribute to their own ABLE account can not only take advantage of additional contribution limits but may now be eligible to take advantage of the federal Retirement Savings Contributions Tax Credit (otherwise known as the Saver’s Credit). The Saver’s Credit is a nonrefundable tax credit that gives a special tax break to low- and moderate-income taxpayers who are saving for retirement. It had previously only be available for contributions to more traditional retirement plans like 401(k) and IRAs, but is now available for contributions to ABLE accounts. Up to $2,000 of contributions to an ABLE account made by the owner of the account can qualify for this special credit. The credit is 50%, 20% or 10% of the eligible contribution depending on the filing status and income of the individual. The Saver’s Credit can reduce the amount of tax a person owes or increase their refund.

Finally, it is now possible to roll funds from a 529 college savings account to an ABLE account without incurring a penalty or tax on the transfer. This is allowed if the beneficiary is the same on both the 529 college savings account and the ABLE account (or the ABLE account belongs to a family member of the 529 College Savings account beneficiary, as defined in the law). A rollover from a 529 college savings account to an ABLE account is subject to the annual contribution limit. Therefore, in 2018, only $15,000 can be rolled over from a 529 College Savings account to a ABLE account (provided no other contributions are made in the same year to the ABLE account).