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A new savings plan for the disabled……
Soon there will be a new savings vehicle for caring for disabled children, the 529 ABLE account. This account is meant to mirror college 529 plans, but is designed for those who have a disability before they are 26 years old. Here are some great benefits that we know so far:
- Friends and family can make regular or one time contributions totaling no more than $14,000 per year.
- The money will grow tax free when used for a qualified disability expense. Such expenses include education, housing, transportation, legal fees, and employment training.
- Having an account will not jeopardize the child’s federal benefits or Medicaid until the account value is over $100,000.
You may be familiar with Special Needs Trusts, which have similar goals as a 529 ABLE, but they function differently. Establishing a Special Needs Trust can be costly, withdrawals are taxed, but the contributions limit is higher and there is a more flexibility in what disability expenses are covered. The features of the 529ABLE account may change, but we look forward to providing more information as soon as the accounts become available, and helping each family determine which account best fits their needs.