On December 16, the US Senate passed important new legislation which included a variety of important tax provisions. Included is the “ABLE Act” which creates tax-favored accounts for children and adults whose disability occurred before age 26. Some additional web sites to review this are NDSS and the ARC and Autism Speaks.
The ABLE Act allows these tax-favored accounts to receive up to the annual gift tax exemption (currently $14,000 per year). Beneficiaries are restricted to one account, but anyone could contribute to their account. Modeled after 529 college savings accounts, ABLE account programs will need to be implemented by the states.
According to the Congressional Budget Office, “assets in an ABLE account and distributions from the account for qualified disability expenses would be disregarded when determining the qualified beneficiary’s eligibility for most federal means-tested benefits. For SSI [Supplemental Security Income], only the first $100,000 in each ABLE account would be disregarded.”
This provides important new options for parents with children with disabilities. We will provide updates as needed for our clients.
The Senate passed the ABLE Act as part of the Tax Increase Prevention Act of 2014, also known as “tax-extenders,” a bill that includes a variety of extensions for temporary tax provisions.
The IRA updates include a one year extension of expired tax provisions retroactive to January 1, 2014. This reauthorizes the IRA charitable rollover through December 31, 2014. Donors age 70 1/2 and older may transfer up to $100,000 from their IRA to a qualified public charity. The transfer will be made free of federal income tax and the gift qualifies for the donor’s 2014 required minimum distribution (RMD).
Because your window of opportunity is short for making IRA rollover gifts, we recommend that you contact your financial planner or tax adviser immediately. Keep in mind that it often takes IRA administrators several weeks to process rollover transactions. In order to complete the gift by year end, you need to act right away.