What You Should Know About Special Accounts for the Disabled | Monroe Township - Middlesex County
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What You Should Know About Special Accounts for the Disabled

July 7, 2016

Filed under: Special Needs,Special Needs Planning — Neel Shah @ 9:15 am

 

You may have heard that there’s a new kind of plan out there for savings for disabled individuals, specifically as it relates to long-term care. Some people are under the impression that this is a new version of a 529 plan, but it’s actually a new type of account that is similar in certain ways, especially meant for those who have disabilities. This is known as the ‘Achieving A Better Life Experience’ Act which was signed by Barack Obama in December of 2014. This Law allows individuals with disabilities to have a tax-free savings account in which they can set aside up to $100,000 without jeopardizing their eligibility for government programs, like Medicaid or supplemental security income. shutterstock_165450731

This is known as the ‘Achieving A Better Life Experience’ Act, which was signed by Barack Obama in December of 2014. This Law allows individuals with disabilities to have a tax-free savings account in which they can set aside up to $100,000 without jeopardizing their eligibility for government programs, like Medicaid or Supplemental Security Income.

SSI benefits would be suspended for individuals who have more $100,000 in these accounts, but Medicaid benefits would continue. These ABLE accounts are modeled quite like 529 college savings plan, since interest earned on the savings is income tax-free. Bear in  mind, however, that any contributions to an account like this are not tax-deductible, though.

The funds inside an ABLE account can be used to pay for healthcare, transportation, housing, and education. In order to qualify to have an account like this, an individual has to have a disability that occurred prior to Age 26.

There are annual caps on contributions under the Federal annual gift-tax exclusion. In 2016, this amount is $14,000. If you’d like to talk more about caring for an individual in your family who has special needs, consult with an experienced New Jersey estate planning attorney today.

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