Using Oregon's New ABLE Savings Plans for Special Needs Family Members
Beginning in December 2016, Oregon is planning to launch a new ABLE Savings Plan for individuals with special needs or disabilities. ABLE (Achieving a Better Life Experience) will provide a tax-advantaged savings account that will allow individuals and families to set aside money for disability-related expenses. Up to $100,000 can be contributed to an ABLE account without disqualifying the disabled individual from receiving other critical benefits such as Medicaid and Supplemental Security Income. Typically, individuals are disqualified from receiving those benefits when their assets reach $2,000.
The savings in ABLE accounts can be invested on behalf of the beneficiary, and any earnings are tax-free if used to pay for qualifying expenses, such as education, housing, assistive technology, personal support services and other disability-related expenses. Oregon’s ABLE plan intends to provide several investment options made up of mostly Vanguard funds and a variety of portfolio strategies. There will also be a cash option. This will allow Individuals to select a strategy that best fits their financial needs and tolerance for risk. In addition, Oregon’s ABLE accounts are expected to have a pre-paid card to help make withdrawals from the account more convenient to beneficiaries and their caregivers.
"Oregon’s ABLE Savings Plan will soon provide a simple and tax-free way to help promote the care and financial independence of people living with special needs. "
To qualify for an ABLE account, the individual must have been diagnosed with a significant disability before the age of 26. Eligibility is further defined based on the Social Security Administration’s definition of disability, which includes people with Down syndrome, autism, cerebral palsy and other intellectual or developmental disabilities.
Contributions made to the account are eligible for a deduction for Oregon income tax purposes if the beneficiary of the account is under the age of 21. In 2016, the deduction is capped at $4,620 for taxpayers filing jointly and $2,310 for single filers. The total annual limit that can be contributed to an ABLE account is $14,000.
Oregon’s ABLE Savings Plan will soon provide a simple and tax-free way to help promote the care and financial independence of people living with special needs. While this is meaningful progress in our State, financial planning for individual with disabilities can be complex and ABLE accounts should be considered as just one part of a total special needs plan.