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ABLE Act: Planning For Disabled Family Members

By Gerry W. Beyer

Disabled child

Last week the United States Congress passed the Achieving a Better Life Experience (ABLE) Act of 2014 as part of the Tax Increase Prevention Act of 2014.  This Act creates the new 529A plan, marking a significant change to the financial planning landscape for special needs beneficiaries. 

The 529A plan is modeled after the 529 College Savings Plans, and is meant to help people with disabilities and allow tax advantaged distributions for certain expenses for the disabled beneficiary including housing, transportation, health and wellness, education and more, without disqualifying the disabled individual from Federal and State aid. 

Similar to 529 plans, any investment growth would be taxed as ordinary income plus a 10 percent penalty.  Moreover, the funds can be rolled over tax-free from one ABLE account to another and the designated beneficiary can be changed from one disabled person in a family to another in the same family. 

See Chris Chen, Ready and ABLE: 529A, a New Planning Tool for Disabled Family Members, Boston.com, Dec. 19, 2014.

Posted in:
Disability Planning - Property Management, Estate Planning - Generally, New Legislation and Non-Probate Assets