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ABLE Accounts: Helping Families Improve Financial Wellness

Jun 24, 2020

Key Takeaways

  • ABLE accounts are a great tax-advantaged way to help families that have a child with a disability save.
  • Similar to 529 college savings plans, ABLE accounts allow for the growth of assets on a tax-free basis.
  • ABLE accounts become especially valuable once Americans with disabilities become adults.

 

Families that have a child with a disability often face unique financial wellness challenges as saving for future housing and health care expenses may make them ineligible for public assistance programs they still need. Fortunately, a special type of savings account called an ABLE account can help families save on a tax-free basis and improve their financial wellness.

ABLE accounts become especially valuable when a child with a disability becomes an adult. At that point, publicly provided support services shift away from education toward income, health care, food, and housing assistance, but qualifying for some public assistance programs requires that the disabled individual have only limited assets and income of his or her own, creating immense long-term financial challenges. Like 529 plans used to save for college, ABLE accounts allow for the growth of assets on a tax-free basis as well as for tax-free withdrawals for qualified distributions to pay disability-related expenses.

 

Americans with disabilities can save upto $100,000 in an ABLE account without impacting their eligibility for SSI.

 

An ABLE account will not disqualify a person with a disability from being eligible for valuable benefits such as Supplemental Security Income (SSI) and Medicaid. And, by minimizing taxes, they make more assets available for the individual’s day-to-day expenses.

 

 

For Compliance Use Only:1036846-00001-00

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