Saving for Children with Varying Abilities
Ask most parents to make a list of things they want to do for their children, and saving for the future will surely make the top 10. While many open a 529 college savings plan, it’s not so easy for parents of children with disabilities. They must make sure an account in their child’s name doesn’t impact Social Security payments or other government funding that child might be receiving.
Millions of families were facing this dilemma until Steven Beck, Jr. did something about it. When Beck’s daughter Natalie was born with Down Syndrome, he realized he wouldn’t be able to save for her financial future the same way he was saving for her older sister. So, he helped create the Achieve a Better Life Experience Act (ABLE), which was signed into law by President Obama in 2014. Since that time, individual states have been setting up their own ABLE savings programs. Governor Hogan signed Maryland ABLE into law on in 2016. Although it’s been around for a few years, many people don’t know about this option which is operated by Maryland 529.
Essentially, the ABLE Account is a savings account for people with qualifying disabilities that has important tax advantages, is user friendly, and does not interfere with means-tested benefits such as Supplemental Security Income (SSI). Here are some highlights:
No taxes on earnings while the funds are in the account, or upon withdrawal to pay for expenses such as medical bills, school tuition, housing, and job-related costs
Easy to set up and easy access to funds with a pre-paid debit card
Can contain up to $100,000 before impacting SSI and other means-tested benefits
Sadly, Mr. Beck passed away before the law was signed, but the ABLE Account remains a remarkable legacy that has impacted many lives.