People with disabilities will be able to open new, tax-free savings accounts under at least one program offered nationally this summer.
The state-sponsored accounts are known as 529 ABLE, or 529A, accounts. Authorized in 2014 by the Achieving a Better Life Experience Act, or ABLE Act, the accounts are modeled loosely on 529 college savings accounts.
The main benefit of the new accounts is that they allow disabled people to accumulate significant savings without jeopardizing their eligibility for need-based government help such as Supplemental Security Income or Medicaid. Disabled people, their families and friends can contribute as much as $14,000 a year without putting federal benefits at risk.
Florida expects to start an ABLE program by July 1, but will restrict enrollment to state residents, according to the program's website.
Families should consider any fees associated with the accounts when making a choice. The website for Ohio's program, called Stable, for instance, says state residents will pay $2.50 a month to maintain an account, plus fees based on a percentage of their assets, depending on which type of investment they choose. Residents of other states may pay more.
Advocates continue to work to enhance the accounts. Currently, for instance, ABLE accounts are available to those who became disabled before age 26. But In March, the sponsors of the original law proposed legislation to expand eligibility to those disabled before age 46.
The ABLE Age Adjustment Act is pending in committee, according to Congress.gov.