HUD posted Housing Notice 2019-06 which provides guidance on the federally mandated exclusion of ABLE accounts from the calculation of income and assets. 

Issued: May 6, 2019 and shall remain in effect until amended, superseded, or rescinded.

Background: The Achieving a Better Life Experience Act of 2014 (ABLE) creates tax-free savings accounts for individuals with disabilities.  This effort seeks to reduce the financial strain on those individuals with disabilities by creating tax-free flexible savings accounts to cover qualified expenses, including housing, education, medical and dental care, and transportation.  The ABLE Account is established for the benefit of an eligible individual and maintained under a state qualified ABLE program. 

Treatment of ABLE account in HUD programs:  Section 103 of the ABLE Act mandates that an individual’s ABLE account (specifically, its account balance, contributions to the account, and distributions from the account) is excluded/disregarded when determining the designated beneficiary’s eligibility and continued occupancy under certain federal means-tested programs.  Since the ABLE Act creates a federally mandated exclusion, in determining a family’s income, HUD will exclude amounts in the individual’s ABLE account pursuant to 24 CFR 5.609(c)(17).

Highlights:

• The entire value of the designated beneficiary’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.  Therefore, do not include any amounts in a verified ABLE account when determining the $5,000 threshold of Actual Cash Value to impute assets.
• Distributions from the ABLE account are not considered income.
• Contributions made by the designated beneficiary
  • If the beneficiary has a portion of his/her wages directly deposited into his/her ABLE account, then all wage income received, regardless of which account the money is paid to, is included as income.
  • However, Pre-tax employer contributions to an ABLE account (that are not deducted from wages) are excluded. (This will likely need to be properly verified from employer)
• Contributions made by others directly into the ABLE account
  • If someone other than the designated beneficiary contributes directly to the ABLE account, even when provided as a recurring gift, that contribution will not be counted as income to the designated beneficiary.
• Rollovers from existing ABLE accounts
  • Rollovers from existing ABLE accounts to the designated beneficiary’s ABLE account are not counted as income to the designated beneficiary.

Verification:  Owner/Agents should verify the amount held in the ABLE account. Owner/Agents should develop a policy and procedure for verifying ABLE accounts that obtains the following information:

• The name of the designated beneficiary; and
• The State ABLE program administering the account to verify that the account qualifies as an ABLE account.