Congress Passes the ABLE Act

This past fall, IABG partners advocated for the Achieving a Better Life Experience (ABLE) Act during a day on the Hill at the CFED Assets Learning Conference. Last week, Congress passed the ABLE Act and, in doing so, allowed individuals with disabilities and their families to build much-needed savings.

Millions of individuals with disabilities rely on public benefits for health care, food, housing, and income. Currently a means or asset test on Social Security Income (SSI), Social Security Disability Insurance (SSDI), and other programs prohibits benefits recipients from building savings over $2000. Essentially, to remain eligible for much needed benefits programs, an individual must remain poor and financially insecure.

The ABLE Act eases financial strains faced by young individuals with disabilities by allowing them to create tax-free savings accounts. Expected to be signed into law by President Obama shortly, the bill allow families to open accounts similar to 529 savings plans for college-bound kids. Money saved in these ABLE Accounts will not be counted against them when applying for federal benefits programs.

Who is Eligible for an ABLE Account?

ABLE Accounts are limited to individuals with an age of onset of disability before turning 26 years of age. If you meet this criteria and are also receiving benefits already under SSI and/or SSDI, you are automatically eligible to establish an ABLE account. If you are not a recipient of SSI and/or SSDI, but still meet the age of onset disability requirement, you would still be eligible to open an ABLE account if you meet SSI criteria regarding significant functional limitations.

How Much Money Can be Saved in an ABLE Account?

The total annual contributions by all participating individuals, including family and friends, are $14,000. The accounts can grow to up to $100,000 before they begin impacting an individual’s eligibility for SSI. Finally, the limits will be adjusted annually for inflation.

How Can the Funds be Used?

The funds in an ABLE Account can be used for any “qualified disability expense,” which means any expense required of the individual as a result of living a life with a disability. This includes education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services. Other eligible expenses will be further described in regulations to be developed in 2015 by the Treasury Department.

What are the Next Steps?

Each state is responsible for establishing and operating an ABLE program. After President Obama signs the ABLE Act into law, the Department of Treasury will begin to develop regulations that will guide the states. No accounts can be established until the regulations are finalized following a public comment period on proposed rules for program implementation. States will begin to accept applications to establish ABLE accounts before the end of 2015.

Questions about the ABLE Act: email Lucy Mullany, IABG Coordinator

You Might Also Be Interested In...

Read our blog

2019 Legislative Roundup: Illinois Takes Steps to Help Families Build Financial Security

IABG advocates for policies that close the racial wealth divide, expand savings opportunities, and...

Read more

Racial Disparities Exist Across All Measures of Financial Security in Illinois

By Sarah Martin, Policy & Advocacy Intern for Heartland Alliance Prosperity Now’s annual...

Read more

IABG Launches Biannual Coalition Connection Meetings

This blog post is written by Katherine Liu, Communications Intern with Heartland Alliance.  ...

Read more

Illinois Legislature Passes the Secure Choice Savings Program

Chicago, IL — On a vote of 30-25-2 in the Senate and 67-45 in the House, the Illinois Secure Choice Savings Program (SB2578) was approved by the Illinois General Assembly today. The bill will give millions of private sector workers in our state the opportunity to save their own money for retirement by expanding access to employment-based retirement savings accounts.

SB2758, sponsored by Senator Daniel Biss and Representative Barbara Flynn Currie, will automatically enroll workers without access to an employment-based retirement plan into the Secure Choice program. While workers can opt-out of the program, those that do participate will be able to build savings in an Individual Retirement Account (IRA) through a payroll deduction. All accounts are pooled together and professionally managed; ensuring that fees are low and investment performance is competitive.

“Illinois has taken a huge step forward in addressing a growing retirement crisis by giving Illinois residents the tools to save,” said Senator Biss. “The Secure Choice program will have a minimal impact on the state and participating businesses, but the effect for workers will be the difference between retiring with dignity and a retiring into poverty.”

More than 2.5 million workers do not have access to a retirement savings account through their employer, according to a report from the Woodstock Institute. The report found lack of access is most serious for low-wage workers, of whom 60 percent lack access, but even for workers making $40,000 or more, 49 percent do not have access to an employment-based retirement savings plan. In every Senate district in Illinois, over half of private-sector workers do not have access to this type of plan.

“The Secure Choice Savings Program will make it easy for Illinois workers to save without burdening employers or the state,” Representative Currie said. “This program can make a secure retirement a reality for hard working Illinoisans.” ”

The Illinois Asset Building Group (IABG), a project of Heartland Alliance, has been advocating with its partners for the passage of the Illinois Secure Choice Program. “Secure Choice is an innovative, simple program that makes saving for retirement easy for Illinois workers,” said Lucy Mullany, Coordinator of IABG and a Senior Project Manager with Heartland Alliance. “We thank the General Assembly for taking a big step towards stronger retirement security for Illinois workers and look forward to working with leaders to implement this new program.”

The Illinois Secure Choice Savings Program was supported by IABG, Heartland Alliance, Woodstock Institute, the Sargent Shriver National Center on Poverty Law, SEIU Healthcare, AARP Illinois, and over 60 organizations and businesses across the state.

 

# # #

The Illinois Asset Building Group (IABG) is a statewide coalition committed to increasing access to the tools people need to build financially secure futures for themselves and their children. IABG’s work across issue areas includes examining barriers and solutions to the persistent racial wealth gap. IABG a project of Heartland Alliance. For more information, visit http://www.fifal.local

Heartland Alliance – the leading anti-poverty organization in the Midwest – believes that all of us deserve the opportunity to improve our lives. Each year, we help ensure this opportunity for nearly one million people around the world who are homeless, living in poverty, or seeking safety. For more information, visit: http://www.heartlandalliance.org

Woodstock Institute is a leading nonprofit research and policy organization in the areas of fair lending, wealth creation, and financial systems reform. Woodstock Institute works locally and nationally to create a financial system in which lower-wealth persons and communities of color can safely borrow, save, and build wealth so that they can achieve economic security and community prosperity. For more information, visit: http://woodstockinst.org/

You Might Also Be Interested In...

Read our blog

Secure Choice Pilot Program Launches

We are facing a national retirement savings crisis. Increasingly, older adults do not have enough...

Read more

New Report Sheds Light on Barriers to Retirement Savings

A new report released today by our friends at Heartland Alliance’s Social IMPACT Research...

Read more

Congress Moves to Expand the Racial Wealth Gap

At a time when wealth inequity is at extremes, it’s been incredibly disappointing to see...

Read more