- December 7, 2017
- Blog , The Portfolio Strategist - Terry Gardner
Great News for New York’s Special Needs Families – 529 ABLE Program Goes Live
With surprisingly little fanfare, New York State recently launched its own state-sponsored 529 ABLE program. This is terrific news for New York State resident special needs families. The legislation, signed into law in December of 2015, allowed for the creation of a savings and investment program, administered by the state, in accordance with section 529 of the IRS tax code (thus the name), to benefit special needs residents. The “ABLE” moniker stands for “Achieving a Better Life Experience”. The program launched in October (2017) and is open for enrollment. Families with special needs members can now enjoy many of the same savings and investment benefits that those with 529 College Savings Plans enjoy. To be eligible, an individual beneficiary must have a documented disability that was present before age 26.
Like the state’s college savings plan, assets contributed to a 529 ABLE plan grow tax free. Distributions are also tax-free, so long as they are made for “qualified” expenses including costs for education, health and wellness, transportation and housing, among other expenses. Unlike other savings plans, assets in 529 ABLE plans, below a certain threshold, are excluded from the calculation determining Supplemental Social Security (SSI), Medicaid, and other means-based benefits. Annual contributions are capped at $14,000 per account, but that figure bumps up to $15,000 in 2018. New York State has placed a cap on total plan assets at $100,000. If assets climb above that level, SSI and Medicaid benefits could be reduced on a dollar-for-dollar basis. Only New York State residents can participate in the state’s new program, although they can also participate in many of the other states’ offerings.
Until now, special needs families have struggled with how to save for their loved-ones’ futures without jeopardizing critical government assistance. 529 ABLE plans go a long way towards that end. Even families with established Special Needs Trusts may want to consider opening 529 ABLE accounts to take advantage of the program’s unique tax benefits. Those interested in learning more can find program details at https://www.mynyable.org/. Of course, before making any investment decision, please consider consulting a financial or tax professional regarding your unique situation.
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