Risk of Asset Forfeiture Upon Death – But Not in Maryland
In Maryland, this is not an issue, “Under Maryland law, an agency or instrumentality of the State of Maryland may not seek payment from an ABLE account or its proceeds for any amount of medical assistance paid for the designated beneficiary unless required by federal law.” From the Does the Medicaid recapture of funds in an ABLE account as described in the Federal ABLE ACT known as “clawback” apply to Maryland ABLE accounts? Maryland ABLE web page.
College Scholarship Service (CSS) Profile
While ABLE accounts are not considered assets for college financial aid through the Free Application for Federal Student Aid (FAFSA) form, the same rules do not apply to the College Scholarship Service (CSS) Profile, a private financial aid tool administered by the College Board that charges a fee to use. The CSS Profile counts ABLE accounts as assets. If you are considering applying to a school that requires the CSS Profile, it is advisable to call the Admissions Office to discuss this matter.
Using ABLE Funds for Unqualified Purposes
If you use ABLE funds for expenses that are not qualified [more information at How Can ABLE Account Funds Be Spent?], those distributions will be taxable as income, and there is an additional 10% penalty for distributions not used for QDE. This can reduce the amount of money available, so it is useful to ensure that you spend your ABLE distributions on QDEs.
More About ABLE Accounts
Comprehensive post: All About ABLE Accounts
- About ABLE Accounts
- Benefits of ABLE Accounts
- Who Qualifies for an ABLE Account?
- How Can ABLE Account Funds Be Spent?
- How Much Money Can Go into an ABLE Account?
- How Do I Set Up an ABLE Account?
- What Else Should I Know About ABLE Accounts?
- Words of Warning About ABLE Accounts
Contact the Bridges Helpdesk for More Information
- Our Accessible web form
- Email: Helpdesk@imagemd.org
- Text: Send to: (410) 357-1546
- Voice mail: Call (410) 357-1546, leave a voice mail message, and we will return your call
This unique project is being coordinated through The IMAGE Center of Maryland, a center for independent living in Towson, and it is funded by a grant from the Maryland Department of Education Division of Special Education/Early Intervention Services.
Updated as of August 28, 2023.