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Saving For People With Disabilities May Soon Be Tax-Free


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A bill that’s expected to be introduced in Congress Tuesday would give families a new way to save money for people with disabilities without jeopardizing government benefits.

The legislation known as the Achieving Better Life Experience Act, or ABLE Act, would create savings accounts that could be used to pay for education, health care, transportation, housing and other expenses for people with disabilities.

A bipartisan group of legislators plans to announce that they will introduce the bill in the U.S. House of Representatives and the Senate at a noon press conference Tuesday on Capitol Hill where they will be joined by representatives of the National Down Syndrome Society, Autism Speaks, The Arc and other groups.

Under the legislation being proposed, up to $100,000 could be deposited into a so-called ABLE account without compromising access to government benefits from Social Security, Medicaid and other programs.

The accounts are modeled after the popular 529 college savings plans, which can be opened at any financial institution. Interest earned on funds within the accounts would be tax-free.

“Our tax code currently provides advantages to help Americans save for college and retirement, yet people with disabilities do not enjoy those same financial planning tools,” said Rep. Ander Crenshaw, R-Fla., who’s sponsoring the House bill. “No longer would individuals with disabilities have to stand aside and watch others use IRS-sanctioned tools to lay the groundwork for a brighter future. They would be able to as well.”

Currently, there are few options for families to save money for those with disabilities who often cannot have more than $2,000 to their name without forfeiting many government benefits. One existing option is the special needs trust, which allows families to set money aside for the benefit of a person with a disability under the care of a trustee. But advocates say the proposed ABLE accounts would offer a much-needed alternative that’s more flexible and significantly easier to start.

“Oftentimes to create a special needs trust you have to have a lawyer. It’s a much more involved process whereas an ABLE account operates more like a bank account,” says Peter Bell, executive vice president at Autism Speaks.

Those backing the ABLE Act say they have high hopes for passage. Before even being introduced, the measure has secured support from at least 20 members of Congress spanning the ideological spectrum from Rep. Barney Frank, D-Mass., to Rep. Ron Paul, R-Texas. A broad array of disability advocacy groups are also on board.

Advocates say a previous incarnation of the bill introduced in 2009 fell apart as a result of timing alone.

“This is one of the only bills that has overwhelming bipartisan, bicameral support,” says Sara Weir, senior policy adviser for the National Down Syndrome Society. “We are very optimistic this year.”

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Comments (16 Responses)

  1. dlmgraham says:

    YES!!! That would be wonderful!! I hope it passes quickly. We need all the help we can to save money for our boy, even though he’s only 9. We don’t want the responsibility to fall upon his siblings shoulders, so we are putting money aside in a separate account. The tax free interest will be a great help.

  2. says:

    This would make an excellent tool of economic independence for anyone with a disability or who is caring for a disabled loved one. I am curious though as to whether or not there will be an eligibility requirement that has to be met before someone can create an account. That withstanding, it’s very encouraging to see the bipartisan support for this legislation. I sincerely hope this gets passed soon.

  3. linkd2jc says:

    It’s about time that some common sense legislation to be introduced. Savings accounts with only minimals capped amounts hinder or prevent a disabled person needing funds to acquire the very expensive living conditions. Living conditions having to pay for things the normal human being with no physical impairments take for granted. The savings will help deal with day-to-day expenses.

  4. Blondie50 says:

    This would be great for our two sons with disabilities. I, too, would be interested in the criteria of setting up such an account. Not a day goes by when I don’t worry about them having enough money to live on after we are no longer here to provide for them. Government benefits do not keep up with inflation and the cost of living a “normal” life.

  5. says:

    Its way pass time to do this I hope it pass quickly. The trust is so intense and very expensive and all the people that have to be paid for the trust to be set up could go in interest free savings for the extraordinary expensive living that is so necessary.

  6. ilem says:

    I think this is a great idea that’s long overdue. I am curious as to when the accounts accumulate $$ over the years, will the value of the account be considered when the kids apply to colleges and universities for aid or grants? And can the monies be used for higher education? I hope this passes so parents will have an avenue to save for their kids/dependents.

  7. Joyce Boles says:

    The planned ABLE accounts should also be allowed at stock brokerages. How else will the disabled be able to cash in on the forthcoming Facebook IPO.

  8. Surya-Patricia Lane Hood says:

    This is a wonderful bill. Please pass it!

  9. Pami says:

    We need more People thinking about all the different types of disability people have in the Unites States,and getting more programs out there to help them and their families out!

  10. Kathy Callahan says:

    Three cheers to the sponsors and supporters of the bill! This is desperately needed for people with disabilities. I know that as a caretaker, there is nothing more frightening than the thought of how my son would maintain his independence if something happened to me.

  11. annie says:

    I hope this bill can be passed! Having a child who will never be able to work, securing his future is a daunting task when faced with the $2,000 resource limit currently imposed on him. HIs care is at least 3 times as expensive as a typically developing child, yet when family wants to help out, leave him in a will, or give me money to cover medical expenses, I have to say no… it’s a real catch 22!

  12. Francine says:

    Yes,finally-it’s very, logical and reasonable to support this bill!

  13. laura jaskier says:


  14. JEN says:

    It is about time something like this is brought to the legislative level.

  15. Carol Johnson, Esq. says:

    Dear Laura J – there are definitely options available, however, not knowing what state you and your ward reside in and not knowing what taxes he is paying, I cannot begin to comment. My best advice would be to seek the help of a National Academy of Elder Law Attorney’s attorney in your state. Find one that specializes in SSI and Medicaid matters. Good luck!

  16. Keith Caldwell says:

    Whatever happened to this initiative?

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