Treatment of ABLE Accounts

The U.S. Department of Housing and Urban Development (HUD) recently issued a notice regarding the treatment of funds in or distributed from ABLE accounts in HUD-assisted programs. The ABLE Act allows states to create tax-advantaged ABLE savings account programs for qualified people with disabilities; these ABLE accounts allow beneficiaries to save funds for qualified disability expenses while the funds in the account and distributions are not counted for purposes of eligibility for means-tested programs.

The HUD notice provides guidance about the exclusion of ABLE accounts from the calculation of income and assets, as required under the ABLE Act. Consistent with Internal Revenue Service and Social Security Administration policy, the HUD notice clarifies that, among other things, for the purpose of determining eligibility and continued occupancy for a list of key HUD programs, HUD will disregard amounts in the individual’s ABLE account and distributions from the account. The notice is a welcome development and the information should be helpful in addressing questions about the treatment of ABLE account funds.