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All You Need To Know About ABLE Accounts

The ABLE Account is an incredibly valuable new savings vehicle specifically geared for individuals with disabilities. Brian shares his personal experiences raising a special needs child and gets into the details of how these accounts operate. The ABLE Account is essentially a way to save and invest on a tax free basis to use for the support costs of disabled individuals.

Here is what you need to know:

  • Earnings grow tax-free if used for qualified expenses, which include HEMS (Health, Education, Maintenance and Support). This is fantastic news, because these qualified expenses are generally fairly liberal.
  • Contributions are not tax deductible at the federal level, but may be eligible for a state tax deduction in certain states.
  • Contributions are limited to $14,000 per year per beneficiary.
  • Each beneficiary can only receive $14,000 per year and only have one account, no matter who contributes to said account.
  • Eligibility to the account is limited to individuals who have been diagnosed with a disability before age 26.
  • These savings accounts will not disqualify the beneficiary for public benefits like: SSI, SNAP and Medicaid, unless the account exceeds $100,000. Compare that to having traditional savings greater than $2,000, which would limit federal assistance programs. Once the ABLE Account does exceed the $100,000 mark, SSI benefits are suspended until the account value falls back below $100,000.

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