Author: Dan Rafter / Source: Wise Bread
Do you have a child with disabilities? You might benefit from investing in a 529 ABLE account. These tax-advantaged savings accounts let you save money for your child’s long- or short-term care without jeopardizing their eligibility for public assistance from the government.
Many parents with special needs children may not even know this savings vehicle exists. After all, it wasn’t until 2014 that legislation paved the way for the 529 ABLE account. If you’re the parent of a child with a disability, here’s everything you should know about these tax-advantaged accounts.
A new opportunity
Congress signed the Achieving a Better Life Experience, or ABLE, act into law in 2014. The new law gave families with special needs children the option to save post-tax dollars in a new type of account. These ABLE accounts were designed to give families a way to save extra money in addition to the financial benefits their disabled child was already receiving from private insurers or from government programs such as Social Security and Medicaid.
It’s a huge positive that families can save in an ABLE plan without losing their eligibility for financial government assistance. Before the act was passed, disabled people who earned more than $700 a month or who had more than $2,000 in assets could lose their eligibility for Medicaid and Social Security assistance.
The ABLE Act changed that. Today, families can save up to $100,000 in a 529 ABLE account before their child will lose their extra Social Security benefits.
Even if they do save more than $100,000 in an account, their child will still be eligible for financial assistance from Medicaid. The money saved in a 529 ABLE account does not count against that $2,000 asset limit.How they work
A 529 ABLE account works similar to its cousins, the 529 college savings and prepaid…
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