If you have a child or grandchild with a disability, one of your biggest concerns is what will happen when you are no longer around to take care of them.
One of the tools you can use is called an ABLE account (Achieving a Better Life Experience), which allows you to set aside extra money that will not interfere with their federal aid. ABLE accounts, also referred to as a 529A, are tax-advantaged savings accounts that allow a beneficiary to withdraw funds tax-free for qualified disability expenses (health, education, housing, transportation, employment training and support, etc.).
A person with a disability can only have one ABLE account, but anyone can contribute to it. To be eligible, you must have a disability that qualifies for SSI or SSDI, or a signed Diagnosis form from a licensed physician and the disability began by the time you were 26. The Internal Revenue Service list of eligible disabilities is long, but some of them include: Autistic Spectrum Disorder, Blindness, Deafness, Psychiatric disorders, Cystic Fibrosis, and Congenital abnormalities.
Each state has their own rules for ABLE accounts, but in Texas eligible individuals with disabilities can save up to $17,000 into their ABLE account in 2023. The lifetime maximum is $500,000, and funds up to $100,000 are disregarded when determining eligibility for government aid. For more information on the Texas ABLE program, please visit www.texasable.org.When it comes to financial planning for your child with a disability, ABLE accounts can be an important tool to help you achieve your goals. However, it is just one piece of the puzzle. Stay tuned for future articles from ML&R about other tools that are worth considering in financial planning for a special needs child, or feel free to reach out to any one of our talented Austin financial advisors if you have questions or need assistance with this type of planning.
