Investing in You: New low-cost savings fund for special-needs children

Middle-class parents of children with disabilities: There’s a new low-cost, tax-advantaged way to save money on their behalf.

Low cost is the key idea here. ABLE accounts serve a purpose similar to the special-needs trusts often set up to help disabled or special-needs children without disqualifying them from government benefits.

ABLE accounts don’t replace special-needs trusts. They are another option.

In December, President Obama signed the Achieving a Better Life Experience (ABLE) Act of 2014, which creates savings accounts for the disabled. Each state will set them up individually.

ABLE accounts will function much like 529 college-savings plans and even have a similar moniker, “529 A.”

Accountants, trust attorneys, and industry experts say the new accounts will make it possible for disabled individuals to have assets without jeopardizing other kinds of financial assistance.

“If a disabled person earned more than $700 per month or had assets in excess of $2,000,” says Kathryn Flynn of, “they risked having to forfeit eligibility for government programs.”

Until now, families got around the restrictions by spending thousands of dollars in legal fees to set up special-needs trusts, which remain popular.

The ABLE Act, Flynn says, has “created a way for families to adequately save for the future as a supplement to private insurance and public benefits.”

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