Savings Accounts for Disabled People Are Expanding. Do You Qualify?
Starting in 2024, a significant change will take place regarding ABLE (Achieving a Better Life Experience) accounts, which are designed to assist individuals with disabilities in managing their finances without jeopardizing their eligibility for essential government benefits. The new legislation expands the eligibility criteria for these tax-advantaged savings accounts to include individuals who became disabled before the age of 46, effectively raising the previous limit of 26 years. This change is expected to broaden access to financial resources for a larger segment of the population, allowing more individuals to save for disability-related expenses, such as healthcare, education, and housing, without the fear of losing vital support from programs like Medicaid and Supplemental Security Income (SSI).
The slow adoption of ABLE accounts has been attributed to the restrictive age limit, which has left many potential beneficiaries unable to take advantage of this financial tool. By increasing the age threshold, advocates believe that more individuals will be encouraged to open ABLE accounts, thus providing them with greater financial independence and security. For instance, someone who became disabled at age 40 can now utilize an ABLE account to save up to $17,000 annually, with the potential for tax-free growth on their investments. This financial flexibility is crucial for individuals with disabilities, who often face higher costs of living and may require specialized services that are not fully covered by insurance or government programs.
Moreover, this legislative change reflects a growing recognition of the diverse experiences of individuals with disabilities and the need for more inclusive financial planning options. With the expanded eligibility, it is anticipated that more families will consider ABLE accounts as a viable option for long-term savings and financial management. As awareness of these accounts increases, it is essential for potential beneficiaries to understand the benefits and regulations surrounding ABLE accounts, including contribution limits and qualified expenses. Overall, this development marks a significant step forward in providing individuals with disabilities the opportunity to build a more secure financial future.
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Starting next year, people who became disabled by age 46 will be eligible to open ABLE accounts. The accounts have been slow to catch on, partly because the current age limit is 26.
