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Planning Discussions - 529 ABLE Plans

May 07, 2015

Achieving a Better Life Experience (ABLE) Act - 529 ABLE Plans for Disabled Children

There is great financial news when it comes to providing for a disabled child. Effective January 1, 2015, 529A (ABLE) accounts have been made available for children with disabilities or special needs. While the States are moving ahead to implement the 529A accounts and make them available to the public, many of the details are still being ironed out.

What’s so Great About a 529A Account?

  • Allows you to save up to $100,000 for your special needs child without jeopardizing their eligibility for Federal or State aid
  • The account grows tax-free
  • Anyone may contribute to the account up to an annual maximum of $14,000

Things to be Aware of:

Although the 529A accounts will be modeled after the 529 College Savings Plans, it is important to know that these accounts are not just like their 529 College Savings Plan counterpart.

  • The account cannot go above the $100,000 limit (including earnings) without jeopardizing Supplemental Security Income (SSI)

  • Check with your State Agency to be sure a 529A account will compromise eligibility for State aid

  • The money goes into the account after-tax

  • Individual contribution is currently topped $14,000 per year

  • These accounts must be opened and maintained in child’s state of residence

  • Once the beneficiary dies, the funds are subject to ‘recapture’ by Medicaid and SSI for benefits received

  • Funds can be used for Qualified Disability Expenses including: Education, housing, health care, transportation, prevention and wellness, and funeral expenses

Who is eligible?

A child who is disabled before age 26 (Eligible disabilities are as defined by Social Security (SSI)).

How Do I Open an Account for My Child?

When available in your state, enrollment in the 529 A account and investment will be handled by your state of residence or designated provider for your state.

Source: FPA Journal Feb 2015, Journal of Accountancy, Mar 10, 2015,National Down Syndrome Society

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