Maryland Achieving a Better Life Experience (ABLE) Program-Modification

2018 continues to be an exciting year for the Maryland ABLE program! 

On Wednesday, May 8, 2018, Governor Hogan signed HB 782/SB550 “Maryland Achieving a Better Life Experience (ABLE) Program-Modification.” This bill added features to the Maryland ABLE program that were important to Marylander’s who were interested in opening ABLE accounts. All provisions of this bill become effective on June 1, 2018.

Changes to the Medicaid Claw Back Provision

Of primary importance to people who were interested in opening ABLE accounts was an amendment to the original Maryland ABLE Act’s Medicaid Claw back clause. The bill authorizes, unless prohibited by federal law, the assets in an ABLE account to be transferred, upon the death of a designated beneficiary, to the estate or ABLE account for an eligible individual.  The amendment also prohibits the State, unless required by federal law, from seeking repayment of medical assistance paid for the designated beneficiary from an ABLE account.

Additional revisions to the Maryland ABLE Act reflect changes promulgated through the Federal Tax Cuts and Jobs Act of 2017. These features, which will become available to Maryland ABLE account holders on June 1, 2018, include:

Rollovers from a 529 College Savings Account to an ABLE Account

If the beneficiary is the same on both accounts (or a family member of the 529 college savings account beneficiary, as defined by Section529 of the Internal Revenue Code), funds in a 529 college savings account can be transferred to a qualified ABLE account. Funds rolled over from a 529 college savings account to an ABLE account are capped at $15,000 and are subject to the annual contribution limit for any given tax year.  For example, if a beneficiary wishes to rollover $15,000 from a college savings account to an ABLE account but has already contributed $3,000 in the taxable year; the maximum rollover would be $12,000.

ABLE to Work Act   

ABLE account holders who are employed may be eligible to contribute up to $12,060 above the annual contribution limit, currently $15,000. Additional contributions are limited to an amount equal to the lesser of the beneficiary’s annual gross income or $12,060 (the 2018 federal poverty wage for a one- person household). The additional contribution is not permitted if the Beneficiary or his/her employer contributes to the Beneficiary’s retirement plan, e.g. 401(k), 403(b), or 457(b) plan, within the taxable year.

Maryland ABLE will offer a 1 hour Webinar to discuss the process for using these new features on June 20, 2018 from 2PM-3 PM. For questions or more information regarding Maryland ABLE or the upcoming webinar, please visit www.marylandable.org or contact us at questions@marylandable.org.