How New “ABLE” Accounts will Help Americans with Disabilities

Modeled after 529 college savings accounts, ABLE will offer tax advantages for people with disabilities.

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a woman with a child with Down SyndromeAmericans with disabilities and their families often face a myriad of financial challenges, but they will soon have a new financial vehicle allowing them to save for expenses and enjoy tax-free growth similar to 529 college savings accounts. Congress passed the Achieving a Better Life Experience Act on the final hour of the final day of Congress in December, creating a new type of tax-advantaged account called an ABLE account or a 529A.

The hope is that ABLE accounts will help level the financial playing field for families raising kids with disabilities. The National Down Syndrome Society estimates that the accounts will benefit roughly 5.8 million individuals and families.

“As a country, we’ve basically said that we value saving for higher education using a 529 plan, but we don’t value saving for the basic needs that are connected to a disability,” says Sen. Bob Casey, D-Pa., who sponsored the Senate version of the bill. “We have this bizarre and really insulting situation where a child with a disability, his or her family couldn’t save for his or her future [in a tax-advantaged account], but they could save for his or her brother or sister because they were going to university.”

Like 529 college savings accounts, ABLE accounts allow families to set aside money (up to $14,000 per person annually), and pay no taxes on that money’s growth as long as it’s used for qualified expenses. For a 529 college account, qualified educational expenses include college tuition, fees and textbooks.

The beneficiaries of an ABLE account may have more diverse needs, so those accounts allow for a broader list of qualified expenses, including special education services and tutoring, health care costs, assistive technology and housing. “[ABLE accounts] are tailored for different purposes because it covers the support, the housing, legal fees and even funeral and burial expenses,” says Dave McKelvey, a tax and business consulting partner at New York accounting firm Friedman LLP.

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Preserving the Right to Self-determination: Supported Decision-Making

photo of Aaron Bishop, Commissioner of Administration on Intellectual and Developmental Disabilitiesphoto of Edwin Walker, Deputy Assistant Secretary for AgingBy Aaron Bishop, Commissioner, Administration for Intellectual and Developmental Disabilities, and Edwin Walker, Deputy Assistant Secretary for Aging

“The goal of the Administration for Community Living is to maximize the independence and well-being of older adults and people with disabilities. We are proud to be a leader in exploring alternatives to guardianship. We believe supported decision-making poses the most promising and flexible model.”

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