4th Quarter 2019

ABLE Accounts for Children with Special Needs

If you have a child with special needs, you know that it can be difficult to save for their future without jeopardizing their access to government benefits. A new type of saving plan, called an ABLE account, is now available in most states and is an important tool in special-needs planning.

These accounts let people of any age who developed a qualifying disability before age 26 to save for their future in a tax-advantaged account, similar to a 529 college-savings plan. Up to $100,000 in the account doesn’t count toward the $2,000 limit for Supplemental Security Income (SSI) Benefits. (Otherwise, if individuals with disabilities have more than $2,000 in savings in their own name, they may lose their eligibility for SSI and other government benefits.) The money can be withdrawn from the account tax-free to pay for expenses that benefit the person with the disability, such as education, housing, transportation, employment training and personal support services.

Anyone can contribute to the person’s ABLE account, but the total contributions for the year can’t exceed $15,000. These plans are administered by the states, like 529s, but you can generally invest in any state’s plan. In most cases, you don’t have to live in that state, although you may get a state income-tax break or lower fees with your own state’s plan. Also look at the plan’s fees and investing options when choosing a plan.

For more information about ABLE accounts and links to each state’s plan, see the ABLE National Resource Center at www.ablenrc.org

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