For most people living with disabilities, the cost of support and care is a huge financial burden.Couple that with the potential loss of government-assisted funding for people with disabilities due to certain income criteria that make them ineligible to receive government-assisted support and life can be simply unbearable.
Prior to 2014, families receiving federal benefits were restricted in the amount of money they could save or invest.A savings account of as little as $2000 could very easily get families taken off these benefits – in essence keeping them poor and preventing them from ever building any kind of wealth.The 529 ABLE (Achieving a Better Life Experience) Act was passed in 2014 by the President to take away these thresholds so as to allow these families to continue to receive support while they climb out of poverty.
Families with a member who has disabilities or the beneficiaries themselves can open up a tax-free 529 ABLE account and accumulate up to $14,000 per year while receiving government assistance.Additionally savings of up to $100,000 total can be accumulated and the beneficiary will not have to fear losing access to vital public benefits such as Supplemental Security Income (SSI).Opportunities to invest and earn returns on those investments are also available with a 529 ABLE account.In both scenarios, the money in the 529 ABLE account is not taxed. Withdrawals from the account that are applied towards the care of the beneficiary are also tax-free.It is important to note however, that while federal taxes may not be charged on qualifying expenses, some states will charge a state tax on the earnings in your 529 ABLE account.Deposits into the 529 ABLE account can be made through contributions from friends and family to the account, an automated withdrawal from your regular bank account to the 529 ABLE account or by check.
While each state’s requirements might differ slightly, in general in order open a 529 ABLE account , these criteria should be met:
As of this writing, you can open 529 ABLE accounts in 42 states and the District of Columbia. You can visit your state’s website below to get more information.Some of the states on this list do not require you to be a resident of that state to open an account.. Thus, if you live in a state that is not currently offering 529 ABLE accounts, you can seek out a state that has the no residency requirement.
We have definitely come a long way as a country in continuing to support people with disabilities. The 529 ABLE Act is an excellent opportunity for people with disabilities to receive the help they need when they need it the most, while being given a chance to build a way out of the cycle of poverty.