New Tax-Free Accounts for People with Disabilities

States will administer accounts

Until now, people with a disability could only keep $2,000 in a savings account if they wanted to stay on Medicaid or receive Supplemental Security Income. With the passage of the Achieving a Better Life Experience (ABLE) Act in 2014, that’s about to change. Similar to a 529 college savings account, the 529A savings account can grow tax-free. Money can be withdrawn tax-free for expenses that qualify. Further, the person with a disability, his family and friends can all contribute to the account.

Limitations to the 529A account include:

•    You must have been ­disabled before turning 26.
•    The annual contribution limit is $14,000.
•    Individuals can only open one 529A account; it must be in the state where they reside.
•    The account is capped at $100,000.

States will administer the accounts. As of September 2015, 40 states and the District of Columbia had passed laws or had bills pending; 10 states had no bills pending.

Visit the 529A resource center: www.ablenrc.org