Planning for a loved one with special needs means thinking about the future. One helpful tool to consider is an ABLE account. This account helps people with disabilities save money without risking important benefits.
What is an ABLE account?
An ABLE account stands for Achieving a Better Life Experience. It’s a tax-advantaged savings account created specifically for individuals with disabilities. This account allows you to save money to cover qualified disability expenses without losing eligibility for public benefits like Medicaid and Supplemental Security Income (SSI).
Who can open an ABLE account?
To open an ABLE account, the individual must have a disability that began before age 26. The person with the disability or their family members can set up and contribute to the account. In New York, the NY ABLE program offers this option to residents, making it easier to save for disability-related needs.
What expenses qualify for ABLE account funds?
Money saved in an ABLE account can cover many expenses related to the disability. These include education, housing, transportation, health care, and personal support services. Using the funds for these expenses helps improve the quality of life for the person with special needs.
Understanding ABLE account limits and benefits
The money in an ABLE account grows tax-free. However, contributions have annual limits, generally capped at the federal gift tax exclusion amount. Also, the total balance in a New York ABLE account cannot exceed $520,000, matching the state’s limit for 529 college savings plans.
Saving in an ABLE account helps maintain eligibility for government benefits while providing funds for essential needs. It’s a smart way to plan for future expenses without jeopardizing financial assistance.
New York has made it easier to support loved ones with disabilities through the NY ABLE program. Exploring this account could be a helpful step in your special needs planning.