How to Treat Employer Contributions to ABLE Accounts

Q An applicant has an ABLE account. He’s able to provide proof that it’s an ABLE account and document its balance. Both the applicant and his employer put money into the account. ABLE accounts aren’t mentioned in the HUD Handbook. Do we count the money as an asset? And is the money his employer deposits into the account considered income?

A No. Achieving Better Life Experience (ABLE) accounts are not counted as assets and employer contributions are not income. These accounts were established under a 2014 law and are designed to allow people with disabilities the ability to save money without jeopardizing government benefits. Specifically, people with disabilities who became disabled before they attained age 26 may contribute up to $15,000 into these accounts annually. As long as the balance of the ABLE account doesn’t exceed $100,000 and the funds are used for “qualified disability expenses,” the account holder’s eligibility for many public benefit programs based upon financial need isn’t affected.

HUD Handbook 4350.3 was last revised in 2013 before the ABLE Act was signed into law. However, HUD published Notice H-2019-06 to provide guidance for ABLE accounts. The guidance states that, “Given that the ABLE Act creates a federally mandated exclusion for ABLE accounts applicable to HUD programs, in determining a family’s income, HUD will exclude amounts in the individual’s ABLE account pursuant to 24 CFR 5.609(c)(17). The entire value of the individual’s ABLE account will be excluded from the household’s assets. This means actual or imputed interest on the ABLE account balance will not be counted as income. Distributions from the ABLE account are also not considered income. All wage income received, regardless of which account the money is paid to, is included as income.”

In other words, for the purposes of determining eligibility, you will disregard any funds in the applicant’s ABLE account when calculating the person’s assets. The only exception is where the money deposited into the ABLE account is the account holder’s own wage income, which will continue to count as the person’s own asset. However, HUD’s notice specifies that wage income earned by a third party, such as a family member or friend, that’s distributed into an ABLE account won’t count against the ABLE account holder.

The HUD notice provides an example. It states that if a beneficiary has a portion of his wages directly deposited into his ABLE account, then all wage income received, regardless of which account the money is paid to, is included as income. Pre-tax employer contributions to an ABLE account (that are not deducted from wages) are excluded. If the designated beneficiary then deposits some of his wages into the ABLE account, that deposited amount must not be included in the household’s asset calculation or counted as income again when he receives a distribution from the account.