The ABLE act (Achieving a Better Life Experience) was signed into Federal law at the end of 2014 and brings with it a new savings vehicle for families with disabled children or adults. The act amends the current 529 college savings plan to include tax-exempt 529A savings accounts for disability-related expenses.
Current law makes saving for disability-related expenses difficult because individuals risk losing federal benefits if savings exceed certain limits. Earnings on an ABLE account would not be taxed if used for qualifying expenses and the account funds would not be considered for the supplemental security income (SSI) program, Medicaid, and other federal means-tested benefits as long as it does not exceed the currently set limit of $100,000.
The following are examples of qualifying expenses that can be paid from an ABLE account:
· Employment training
· Assistive technology
· Health prevention