Most Atlanta parents spend time thinking about their children's futures. However, when parents have a child with a disability or other special needs, they need to carefully consider their children's futures in order to avoid jeopardizing any government programs or aid they may need in the future. For this reason, they ordinarily engage in special needs planning in order to provide for their children into adulthood and after they pass away.
Many people use special needs trusts as part of their planning, and they are an incredibly useful tool. However, when friends and family want to contribute to the future of a special needs child, working with a trust may be a bit too complex. This is where an ABLE account comes into play.
In 2014, Congress passed the Achieving a Better Life Experience Act, which recognizes that parents and adult children who work need a way to save for the future without jeopardizing their access to government programs and aid. An ABLE account fits that requirement and essentially functions like a 529 college plan in that anyone can contribute after-tax dollars to it, the account grows tax-free and any withdrawals for qualifying expenses do not create a taxable event. The account can reach up to around $300,000 before no further contributions can be made to it.
As helpful as an ABLE account can be, some restrictions and limitations do apply. Atlanta parents of a child with special needs would probably find it worthwhile to gain a deeper understanding of how these accounts work, along with the pros and cons. When this type of account is added to other special needs planning, it can give the child, the parents, extended family and friends to all participate in the future of the child.