All of the following are true about ABLE accounts EXCEPT: 1. Contributions are deductible. 2. Contributions...
All of the following are true about ABLE accounts EXCEPT:
1. Contributions are deductible.
2. Contributions are limited.
3. Distributions are tax-free when used to pay qualified disability expenses.
4. Must be established before the designated beneficiary reaches age 26.
Homework Answers
Answer -
Step - (1) - Information Given -
All of the following are true about ABLE accounts EXCEPT:
- Option - (1) - Contributions are deductible.
- Option - (2) - Contributions are limited.
- Option - (3) - Distributions are tax-free when used to pay qualified disability expenses.
- Option - (4) - Must be established before the designated beneficiary reaches age 26.
.
Step - (2) - Analysis -
An ABLE account is a savings account available to individuals diagnosed with significant disabilities before age 26.
Contributions to the ABLE account are not tax deductible for the purposes of federal taxes.
An individual can contribute up to $15000 a year to any ABLE account.
Distributions are tax-free when used to pay qualified disability expenses
In the given case, Options - (2), (3) and (4) are Incorrect, because all these are true statements about ABLE accounts.
.
Step - ( 3 ) - Conclusion -
Option - (1) is Correct, because the given statement is not true, as the contributions to the ABLE account are not tax deductible for the purposes of federal taxes .
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All of the following are true about ABLE accounts EXCEPT:
1. Contributions are deductible.
2. Contributions...
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