How Can 529 Able Accounts Benefit Special Needs Families?

529 Able accounts offer tax-advantaged savings for qualified individuals with disabilities. Financial advisors specializing in serving special needs families can help establish and optimize 529 Able accounts to achieve their greatest utility and benefits.

Special needs financial planning involves helping individuals and families whose lives are impacted by disabilities manage their money so they can provide for the lifelong needs of differently abled family members. 529 Able accounts have become a useful tool and an integral part of special needs financial planning.

But what are 529 Able accounts, and how are they best used for maximum benefit? Let’s learn more about this type of account and get answers to questions from financial advisors experienced in serving special needs families.

What is a 529 Able (529a) Account?

In 2014, Congress passed the Stephen Beck Jr. Achieving Better Life Experience (ABLE) Act. It offers a type of tax-advantaged savings account for qualifying disabled individuals and allows them to retain their eligibility for public benefits.

529 Able accounts serve as alternatives to special needs trusts and are administered by each individual state, similarly to 529 college savings plans. They are designed for disabled individuals who are under 26, meet the criteria for SSI or SSDI, and have a disability certification as well as an official diagnosis by a physician. 

As long as the funds are used to pay for certain disability expenses such as education, job training, and healthcare, the money may be withdrawn tax-free. A 529 Able account can accumulate $16,000 per year in 2022 without disqualifying the special needs individual for public benefits. If an Able account exceeds $100,000, however, SSI benefits will be suspended. 

Benefits of a 529 Able Account

A 529 Able account offers a number of benefits, including:

• Tax Benefits: The money earned in an Able account is not subject to taxes by the state or federal government. Also, any money withdrawn from it will not be taxed if it’s allocated toward Qualifying Disability Expenses. 
• Allows a Special Needs Child to Receive Federal Benefits: Just like a special needs trust, a 529 Able account will allow you and others to save money for a special needs child’s future without impacting their eligibility for public benefits.
• Supports a Special Needs Child in an Affordable Way: When comparing the costs of setting up a 529 Able account and special needs trust, an Able account is considerably less expensive. 

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