Congress Passes ABLE Act to Create Tax-Free Savings Accounts for People with Disabilities
Congress has passed a new law allowing individuals with disabilities and their families to create tax-free savings accounts.
Virginia Beach, VA (Law Firm Newswire) December 18, 2014 – The Achieving a Better Life Experience or ABLE Act passed Congress and is expected to be signed by President Obama. The law allows family members of individuals with disabilities to deposit funds in special accounts, the income for which will remain tax-free, provided it is spent on qualified expenses such as housing, health care, education and transportation.
“This is great news for people with special needs and their families,” said Andrew H. Hook, a Virginia special needs planning attorney with Hook Law Center, with offices in Virginia Beach and northern Suffolk. “These savings accounts will allow individuals with disabilities to lead more independent lives.”
In addition to permitting tax-free savings for qualified expenses, ABLE accounts will allow people with disabilities to build their assets without affecting their eligibility for public assistance programs. The ABLE Act provides that funds within the accounts will not be counted when determining eligibility for need-based programs such as Medicaid and Supplemental Security Income (SSI), though some limitations are included in the legislation. Family members of eligible individuals with disabilities can contribute up to $14,000 per year to such an account, up to a maximum of $100,000. If an account exceeds $100,000, SSI payments will be suspended. Only individuals who became disabled prior to age 26 will benefit from this new legislation.
The new legislation has been described as one of the most important laws to affect Americans with disabilities since the passage of the Americans with Disabilities Act of 1990.
“I look forward to helping special needs families use this important new tool to build a brighter future,” said Hook.