It took a lot of work, but the ABLE Act was finally passed and offers a fantastic financial tool for individuals with disabilities to soon take advantage in their state.
Achieving a Better Life Experience (ABLE) Act allows individuals with disabilities to open a tax-sheltered savings account (similar to a 529 college savings account) in their name. These ABLE accounts are so important because they allow individuals to save and have access to money without putting their federally funded public benefits in jeopardy. A total of $14,000 can be contributed annually, and up to $100,000 can be saved for disability-related needs such as education, housing, transportation, employment support, health/prevention/wellness costs, assistive technology, personal support services and other expenses. Without an ABLE account, and individual on SSI must never have more than $2,000 or their benefits would be reduced. Therefore, many had to either “spend down” their checking account on things they didn’t necessarily need and rely on a special needs trust for their life savings.
Every state is working towards the regulations to offer ABLE accounts to their citizens, and some states will have ABLE account options ready as early as summer 2016! For more information on ABLE accounts and how it can interact with other financial planning tools, check out this fantastic webinar by the National ABLE Resource Center.
Congrats to all the advocates who helped get the ABLE Act passed!