Learn how ABLE to Work can work for you
IL ABLE accounts offer many benefits. ABLE to Work is one of them. Account Owners who work and earn money can contribute more than the annual $16, 000 contribution limit. That means more savings.
Am I eligible for ABLE to Work?
If you are working full-time or part-time and do not participate in an employer-sponsored retirement program in a calendar year, you can contribute more to your account. Employer-sponsored retirement programs include:
- A defined contribution plan such as a 401(a) or 403(a) plan,
- An annuity contract such as a 403(b) contract, or
- An eligible deferred compensation plan, such as a Section 457(b) plan.
Account Owners who take part in their employer’s retirement program cannot participate in ABLE to Work.
How much more can I contribute with ABLE to Work?
You can save above the annual $16,000 contribution limit in an amount that is the lesser of:
- The U.S. Department of Health and Human Services (HHS) Poverty Guidelines amount for a one-person household in your state of residence for the prior year. This amount is currently set at $12, 880 for the 48 contiguous states for 2021.
OR
- Your gross annual wages.
The following hypothetical examples demonstrate how ABLE to Work works.
Example 1
IL ABLE Account Owner, Jane works full-time and earns $24,000 for the year. Her employer does not offer a retirement program.
With the help of Jane’s family and support network, she is able to reach the maximum contribution limit of $16,000 for the year.
Because she is working, she knows she can save even more with ABLE to Work. Since her earnings are greater than the Poverty Guidelines set by HHS, she determines that she can contribute up to an additional $12,880 from her earnings to her IL ABLE account.
This means Jane can contribute up to $28,880 in her IL ABLE account for the year.
That’s $16,000 + $12,880 = $28,880.
Example 2
IL ABLE Account Owner, Devon is a high-school student working a part-time summer job for a big box store.
While his employer offers a retirement program, Devon, as a part-time employee doesn’t qualify to participate. Devon earns $8,000 in gross wages for the year.
Devon’s family and friends have helped him reach the IL ABLE maximum contribution limit of $16,000 for the year.
Devon plans on saving his earnings for going to trade school after he graduates. Because of ABLE to Work, Devon can contribute all or part of his earnings to his IL ABLE account.
Since Devon’s earnings are less than the HHS Poverty Guidelines, he determines that he can contribute up to $8000 more in his IL ABLE account making his total contributions for the year $24,000.
That’s $16,000 + $8,000 = $24,000.
Are there other benefits to ABLE to Work?
Yes! If you make an additional contribution to your IL ABLE account, it is eligible for something called the Saver’s Credit, an existing federal tax credit that low and middle-income individuals can claim when they make contributions to a retirement account. Under the ABLE to Work Act, contributions to an ABLE account can qualify for the credit.
How do I get started with ABLE to Work?
Getting started with ABLE to Work is easy! You or your Authorized Individual just need to download and complete an Earned Income Contribution Certification form, which can be mailed in or uploaded through the account portal
There are a couple of important things to remember:
- Any earnings contributed to an IL ABLE account are not protected from the SSA income tests, only assets are. So, any money you earn may be subject to SSA income tests.
- It is best practice to keep adequate records of your contributions to ensure that you do not exceed the annual limit.
- You can have all or part of your paycheck direct deposited into your account, making saving even easier. Sign-up for direct deposit by logging into your account online or by downloading and completing a Payroll Direct Deposit Form, which can be mailed in or uploaded through the account portal.
Read more about ABLE to Work.
Don’t have an IL ABLE account? Enroll here.
Want to learn more about IL ABLE? Visit illinoisable.com or read the Plan Disclosure Documents.
Questions about IL ABLE and ABLE to Work? Contact Customer Service at 888-609-8683, 8am – 5pm, CT, Monday through Friday.