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301 Lynnfield Street, PO Box 3169, Peabody, MA 01960

Phone: 978-532-0266

Fax: 978-532-9105

1147 Main Street, Suite 213, PO Box 299, Tewsbury, MA 01876
Phone: 978-851-8044               Fax: 978-851-9332

Email: jack@cbps.com

October 2018

Special Needs, Special Savings

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While parents have a variety of tax-advantaged ways to save for their children’s educational needs, they haven’t always enjoyed the same tax benefits when saving for the future of their special-needs children. The Achieving a Better Life Experience Act (ABLE) of 2014 provides such an opportunity.


ABLE ACCOUNTS
States may offer ABLE accounts, designed to pay for disability-related expenses, to people who become disabled before age 26. Account earnings are tax-deferred, but you make contributions to an ABLE account after tax. Qualified withdrawals — including support services, assistive technology, employment training, transportation, education and housing — are tax-free.


You and other loved ones can each contribute up to $15,000 gift-tax-free, and the recent tax law changes now allow disabled persons to also contribute to their ABLE accounts subject to certain limits. The first $100,000 of ABLE account assets are not considered part of the account beneficiary’s assets, a positive feature for those depending on Medicaid eligibility.


TAX LAW CHANGES
A provision allowing ABLE account beneficiaries to qualify for the Saver’s Credit based on account contributions of up to $2,000 is new in 2018. Also new are limited rollovers to an ABLE account from 529 plans of the disabled beneficiary and loved ones.


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