THE ABLE ACT
Good news! The federal government recently approved a new law, the ABLE Act. The purpose is to help individuals with disabilities save money to pay for their own care and living expenses, while allowing them to remain qualified for government benefits, outside of a special needs trust.
This law is expected to be approved soon by New York State. Here at Stefans Law Group, we will keep you updated on the latest details of the law and the status of its approval.
The new law will allow people with disabilities to open special savings accounts, similar to a 529 plan, where they can save up to $100,000 without risking eligibility for Social Security and other government programs.
This is a big change from the law that previously allowed an individual to have no more than $2,000 assets in his or her name to qualify for SSI.
Here are some of the important facts you need to know about the ABLE act:
To qualify, a beneficiary must have been blind or disabled before age 26, and either be entitled to SSI benefits or have a doctor’s certification of blindness or a “physical or mental impairment which results in severe functional limits.”
- Each individual may only have one ABLE Act account per year.
- Contribution to the account can be made by anyone.
- The contribution must be made in “cash” (check or in-kind roll over).
- The total amount of contributions per year is capped at $14,000.
- The aggregate contribution to the account would be subject to an overrall limit matching the state limit for Section 529 accounts. However, if an account exceeds $100,000, the individual will not qualify for SSI benefits. The individual would still qualify for Medicaid, but only if the funds in the account are below the state limit for Section 529 accounts.
- The account grows tax free if the funds are being used for “qualified expenses” that include education, housing, transportation, employment training, legal fees, and expenses. If used for other purposes, investment gains are subject to income tax and a 10% penalty.
- The account owner, or a person appointed to make decisions on his or her behalf, will pick from the plan’s investment options.
Here at Stefans Law Group, we like to keep our clients informed of the legislative changes that could affect their families. We will keep our clients updated on the status of the ABLE Act as this could have a big impact on how individuals can save money and qualify for government benefits.
As a firm that handles special needs planning, our office is happy to discuss these new changes with you. For more information on the ABLE Act, and to see if this account might be the right fit for you or a loved one, call the attorneys of Stefans Law Group, at 516-692-2744.