What happens if the beneficiary is no longer eligible for an account?

If a beneficiary no longer meets eligibility requirements, they no longer qualify for an ABLE account and they (or their Authorized Legal Representative) should sign into their account’s settings and update their eligibility. Their account will remain open and they can continue to use the account until the end of the year.

After the end of the year, the beneficiary is no longer eligible, no new contributions (including automatic transfers) will be allowed and account withdrawals will be treated as non-qualified withdrawals. The earnings portion of non-qualified withdrawals is subject to income taxation and to a 10% federal tax penalty, and non-qualified withdrawals may affect eligibility for Supplemental Security Income (SSI) and other federal benefits. The account will close if all the money is withdrawn. 

If the beneficiary begins to experience an eligible disability again, they can sign into the account’s settings and update their eligibility. If the account has been closed, they can sign up for a new one here.