ABLE Act and Financial Planning for Special Needs Children in Virginia
The state of Virginia was the first state to approve legislation related to the ABLE Act (Achieving a Better Life Experience) of 2014. The ABLE Act allows a person with a disability, or his or her family to set up a special savings account to cover expenses related to the disability. This can be a big help in allowing a disabled person or his or her family to save for the future without jeopardizing eligibility for Social Security or other government programs. The savings account is similar to a 529 savings account, allowing savings up to $100,000 for the benefit of a disabled person. These ABLE savings trust accounts will be administered by the Virginia College Savings Plan, with the rules applying to the account:
- A person is eligible for the ABLE savings trust account if he or she became disabled prior to the age of 26 and is currently either receiving Social Security Disability Insurance or SSI, or files an IRS-approved disability certification.
- There is no federal income tax on earnings from contributions to the ABLE savings trust account.
- The ABLE account can help an individual and/or his or her family to:
- Save for or pay for education;
- Save for or pay for a home;
- Save for or pay for a vehicle;
- Save for or pay for employment training;
- Save for or pay for assistive technology;
- Save for or pay for health, prevention and wellness;
- Save for or pay for personal support services;
- Save for or pay for financial management or administrative services, or
- Save for or pay for certain other expenses.
- ABLE savings trust accounts are exempt from Virginia taxable income;
- Once the assets in the ABLE account reach $100,000, if the beneficiary is receiving SSI benefits, those benefits will be temporarily suspended until the assets drop below $100,000, with no re-application required.