July 29, 2019

If I withdraw the full balance and close my account, are the funds taxable?

The funds are not taxable if used for Qualified Disability Expenses. If withdrawals from the ABLE account for the calendar year exceed the Qualified Disability Expenses, the earnings portion of the funds may be subject to income tax, plus a 10% penalty. Consult a tax professional for additional guidance.

Keep in mind that these funds may be considered an asset for federal means-tested programs, like Supplemental Security Income or Medicaid. Alternatively, you may roll over the funds to another ABLE account.