In December of 2014, federal legislation was passed called the Achieving a Better Life Experience Act (the ABLE Act), which authorizes tax-favored savings accounts that may accept contributions and make distributions to pay for the expenses of individuals who are blind or disabled on or before the date on which the individual attains age 26 and at the same time will not disqualify the beneficiary from eligibility for government benefits, provided that certain requirements are met. Last March, Attorney Christine Anderson wrote a blog article entitled, New ABLE Accounts Allow Savings for Special Needs Individuals, discussing the federal legislation that was passed.
As we indicated in the March 2015 article, the federal law simply authorized states to establish programs to facilitate the ABLE Act accounts; it did not itself establish programs under which individuals could participate. In order for individuals to start taking advantage of the ABLE Act and set up a savings account for a disabled individual, states need to pass legislation to allowindividuals to participate in a program. New Hampshire has now taken the next step in the process. Effective March 16, 2016, New Hampshire Senate Bill 265, authorizes the establishment of an ABLE savings account program in New Hampshire.
The New Hampshire legislation also provides that income and distributions from any qualified ABLE account that are exempt from federal income tax will be exempt from the New Hampshire interest and dividends tax. (If a portion of a distribution will be subject to federal income tax, then the accrued income portion of the savings plan distribution will be subject to the New Hampshire interest and dividends tax).
While this legislation is encouraging and it is the next step in the process, it does not mean that accounts are available to the public at this time. The New Hampshire ABLE savings account program is contingent upon several additional actions being undertaken, including the adoption of federal regulations to implement state ABLE programs, the identification of a suitable third-party vendor to administer the program, and an appropriation from the general fund for the state ABLE account program.
We will continue to keep you updated as the situation develops and additional actions are undertaken to enable New Hampshire citizens to begin taking advantage of ABLE accounts.