Who can benefit from opening an ABLE account?

ABLE accounts can be a difference maker for parents and individuals with disabilities.

ABLE accounts: a versatile tool for Achieving a Better Life Experience for people with disabilities and special needs

Want to help your child save for their own vision of the future, while maintaining eligibility for government benefits? Looking for a way to teach them about budgeting and managing their own investments? An ABLE account could be the financial tool that helps makes it possible.

What is an ABLE account?

Established under recent legislation, ABLE accounts are tax-advantaged investment and savings accounts that can be used for any disability-related expenses. Perhaps the most important feature of ABLE accounts is the fact that money accumulated for a person with special needs or disabilities in an ABLE account is not counted as an asset when determining eligibility for needs-based government benefits like Medicaid or SSI (subject to limitations).

Many families open 529 educational savings accounts for their children at birth, but sometimes a child receives a diagnosis that changes the family’s plans regarding post-secondary education. Because ABLE accounts are not limited to use for educational expenses and can be used for a broad variety of costs related to a person’s disability, they now offer an alternative to traditional 529 savings accounts. Parents and caregivers can open an ABLE — and even transfer funds accumulated in other 529 accounts to an ABLE — to save for the future, whatever the specific goals may be.

As children with disabilities or special needs approach age 18, means testing for government benefits eligibility is based on their own resources, not the resources of the family. Moving funds into an ABLE account prior to an 18th birthday is an opportunity to ensure savings continue to grow for the future, while eligibility for crucial benefits can be maintained.

Who is eligible to open an ABLE account?

ABLE accounts can be opened for people of all ages, as long as the disability started prior to age 26. So, even adults with disabilities and special needs can use ABLE accounts for the tax advantages that may be available, including tax-free withdrawals, state tax deductions (in some states) and even the federal “Saver’s credit.”

For too long, individuals with disabilities who enter the workforce have been discouraged from fully participating in available employee benefits for fear of jeopardizing the benefits that help with housing, health care, and other important needs. Now, working people with disabilities or special needs can open their own ABLE account to save for the goals most important to them. Many ABLE accounts allow direct deposits and even employer contributions, making it easy to fund and grow an employed person’s account.

How can an ABLE account work for you?

ABLE accounts are a powerful tool for individuals saving to become a homeowner, build an emergency fund, take a dream vacations, go to school, retire or any number of other goals.

Access to savings can be as easy as a debit card. For people who need a little extra help, ABLE accounts allow an Authorized Individual, like a parent, guardian, conservator or power of attorney to assist in managing the money and ensure that funds are available for qualified disability-related expenses.

Housing can be one of the most important areas of concern for people with disabilities and special needs, and ABLE accounts offer a unique feature that can help with housing costs. Typically, funds received for basic expenses like housing and food are considered “in-kind support and maintenance” and may result in a reduction of Supplemental Security Income (SSI) payments. But, money from an ABLE account can be used for housing and other basic living expenses without reducing SSI eligibility.

While one of the key benefits of ABLE accounts is the fact that assets are exempt from government benefits means testing, ABLE accounts can also be a great option for those individuals who aren’t currently receiving benefits. The ability to save in a tax-advantaged way for disability-related expenses can be a benefit for anyone who is eligible. Ask your financial professional for more information, and access Voya Cares resources below.

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Products and services are offered through the Voya® family of companies.

Neither Voya Financial® or its affiliated companies or representatives offer legal or tax advice. Please seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance/investment decision.

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