Stephen Merritt, CPA, PC | Certified Public Accountants | (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462
- ABLE Accounts- Final Regulations
- The Power of Listening
- Tip of the Month
ABLE Accounts- Final Regulations
ABLE (Achieving a Better Life Experience) accounts are for eligible individuals with a disability – they are tax-favored savings accounts to which contributions can be made to help pay for qualified disability expenses. The IRS recently released final regulations providing guidance related to various issues surrounding the requirements for 529A ABLE accounts.
ABLE accounts were established under the ABLE Act of 2014, in an effort to address the financial hardships for families with children having disabilities, as well as the anticipated increasing financial needs throughout those disabled individuals’ lifetimes. Proposed regulations were released in 2015, and then again in 2019 to address modifications under the Tax Cuts and Jobs Act (TCJA). The regulations provide a transition period of two years for ABLE programs to implement applicable provisions, and it is expected that IRS may issue additional guidance during that time as uncertainties and concerns arise.
Here are a few of the key areas of ABLE accounts.
Multi-State Programs: The final regulations clarify that an ABLE program may be maintained by two or more states if each of the states in the program sets all the terms of the program and is actively involved in its administration.
Persons Eligible to Set Up ABLE Account: A beneficiary can designate any person to establish an ABLE account, and if a beneficiary is incapable of setting up his/her own account, it can be set up by a power of attorney, conservator or legal guardian, spouse, parent, sibling, grandparent, or representative payee (in that order). A certification by an individual (under penalties of perjury) that he/she is authorized to set up the ABLE account on behalf of the beneficiary may also be accepted by ABLE programs, per the final regulations.
Persons with Signature Authority: The final regulations offer several options as far as who (and how many) may have signature authority on an ABLE account. The person who established the account generally does, although the beneficiary can replace that person’s signature authority with his/her own, or a specified designee. An ABLE program may allow co-signatories and may also permit the person with signature authority to establish sub-accounts within the ABLE account with different signatories for each.
One Account Rule: An ABLE account may not be set up for a beneficiary who already has an existing ABLE account open. If it is found that a previous ABLE account exists after a subsequent ABLE account has been set up, the subsequent account will maintain ABLE status if, by the due date of the tax return for the year in which the second account was established, all of the contributions to the new account (and any income earned) are returned to the contributor(s) or transferred to the beneficiary’s pre-existing ABLE account.
Disability Certification/Eligibility Recertifications: The final regulations permit an ABLE program to rely upon a certification signed by the beneficiary or an individual setting up the account on his/her behalf. The certification must state that the individual either has a medically determinable physical or mental impairment that can be expected to result in death or last for a period of not less than 12 months, or that he/she is blind and that such disability occurred before the age of 26. The regulations require ABLE programs to obtain annual recertifications unless an alternative method is established (giving ABLE programs broad discretion to create their own recertification methods).
Loss of Eligibility: The final regulations state that even if a beneficiary who was eligible when an ABLE account was established later loses eligibility due to an improvement in his/her condition, the ABLE account continues to be an ABLE account. The program must stop accepting contributions to the account on the first day of the first year a beneficiary is no longer considered an eligible individual. Withdrawals made from the account on any date after the date that the beneficiary is no longer considered disabled are not qualified disability expenses.
Annual Contribution Limit/Additional Contributions: The annual limit for contributions to an ABLE account is the same as the annual gift tax exclusion amount ($15,000 for 2020). However, certain employed or self-employed beneficiaries may qualify to make additional contributions. An ABLE program may rely on certification from the beneficiary (or a person acting on his/her behalf) that the employee is an “employed designated beneficiary” and therefore eligible to make the additional annual contributions.
Other Issues Addressed:
Payment of administrative and investment fees out of ABLE accounts do not constitute distributions for tax purposes.
The beneficiary may treat expenditures made in the first 60 days of a calendar year as having been made in the prior year (for purposes of matching qualified disability expenses with distributions in a given tax year).
Upon death of a beneficiary, after the expiration of any statute of limitations for filing Medicaid claims against a beneficiary’s estate, an ABLE program may distribute the balance of the account to a successor beneficiary or, if none, to the deceased beneficiary’s estate.
Gift tax and generation-skipping transfer tax do not apply to transfers of an ABLE account by rollover, program to program transfer, or change in beneficiary. Any other transfer is considered a taxable gift or transfer of the entire account by the beneficiary.
The Power of Listening
Now, more than ever before, the act of listening is important. Not only is it important to listen to someone, but to effectively listen to them. Sure, we all know that in order to understand individuals, to connect with them and understand their wants and needs, we need to be alert, focused, and mindful. After all, the power of listening—effective listening—will help you get more information from clients, increase their trust and commitment in you, and reduce conflict and misunderstanding.
Below, we’ve included more information on the power of listening, and tips on how to be a better listener.
What It Means To Listen
We don’t need to give you a textbook definition of listening; you already know what it means. However, it is necessary to point out that the act of listening and actually comprehending what a person is saying can lead to strong, healthy, and thriving relationships—all very important qualities in any type of relationships, specifically a business one.
If you don’t believe us, think about the last time you were having a conversation with someone and felt as if you weren’t being heard. How did that make you feel? How did that affect the relationship? Did it make you feel valued?
According to Dr. Carl Rogers, a psychologist, active listening is a specific communication skill. Giving free and undivided attention to a speaker through active listening is the most effective way to achieve individual change and group development.
Isn’t that the ultimate goal? Whether the relationship is professional or personal, don’t you want to establish a solid, mutual ground of respect? It’s the only way for both parties to succeed.
If your listening skills are in need of a little tune up, don’t worry—we’ve got you covered! We’ve put together a list of different ways to help you become a better listener.
Tips On Becoming A Better Listener
If you truly want to become a better listener, then consider implementing these tips into your daily life.
Understand The Benefits
First, it’s imperative to understand that listening to someone is beneficial to both the person doing the talking and you. Nothing bad or negative comes from listening to another person speak, but the complete opposite. Remember, if you thoroughly listen to an individual, it’s more likely that same individual will listen to you when it becomes your turn to speak. The partnership the two of you are hoping to grow can only be successful with mutual listening.
Make Eye Contact
Next, when someone is speaking to you, always make eye contact. This tactic not only shows respect, but it will also help you focus on the other person’s words, what he or she is saying and how they feel.
When sharing a conversation with someone, make sure there are no distractions. Obviously, this means you need to put down your phone and give the speaker your full attention. Don’t worry about what’s going on around you; don’t think about your next meeting or what you plan to have for lunch. Listen, engage, and show the person talking that you care.
One of the best ways to show the speaker that you are really listening to them, is to ask them questions. Make sure you fully understand what they’re saying by verifying their wants, needs, and/or concerns with specific questions.
Remember, nothing bad comes from listening—only good. The next time someone is speaking, consider opening up your eyes, ears, and mind just a little bit more. In doing so, you will gain the full benefits of the power of listening.
Tip of the Month!!
If you do not have access to a Fax machine or a scanner, do not worry you have one in your hand!!
If you have an iPhone, or iPad you have scanning capabilities!!
- Simply open your iPhone or iPad.
- Go to Notes
- Select a note or create a new one
- Tap the Camera Button on the bottom
- Select Scan Documents
- Place your document in front of the camera
- If your device is in Auto mode, your document will automatically scan. If you need to manually capture a scan, tap the Shutter button or one of the Volume buttons. Then drag the corners to adjust the scan to fit the page, then tap Keep Scan.
- Tap save or Add additional Scans to the document
- Once you hit Save, you can tap the 3 dots in the upper right hand corner to send the scan.
- Tap “Send a Copy”
- You can then choose how you want to send the scanned item, either via text message or as an attachment to an email.
Coronavirus Disease (COVID-19)
Stephen Merritt, CPA, P.C. understands the challenge the impact COVID-19 has on our community.
Our office will continue with regular business hours; however due to COVID-19 there are no client meetings. We have a handy system of passing the box thru the door, as well as following sanitary procedures.
Hours of Operation: Monday- Friday 8:00 am till 5:00 pm
Tax documents may be mailed, FAXed or emailed.
Final Returns will be mailed out.
As always, please call, we are happy to assist.
Stay safe and healthy.