by Thomas D. Begley, Jr., Esquire, CELA
On December 16, 2014, Congress enacted and the President has signed an Act known as Achieving a Better Life Experience (ABLE) Act of 2014.[1] This Act is to provide a tax-favored account, similar to a 529 Plan, for individuals with disabilities to pay for qualified expenses. Highlights of this Act are as follows:
While these ABLE accounts are a useful tool for individuals with disabilities, they are of limited benefit. The two advantages to these accounts are (1) the non-taxed nature of the earnings on the accounts, and (2) the fact that there is little or no cost involved in establishing these accounts. The primary disadvantages to the accounts are that they are limited to $100,000 and the Medicaid payback. In a Third-Party Special Needs Trust there is no Medicaid payback and funds remaining in the trust can be distributed to children or grandchildren as the parent or grandparent establishing the trust sees fit. It is anticipated that the individuals funding these accounts will be third party such as parents and grandparents or other family members so they will not be able to replace First-Party Special Needs Trusts. They are also not a substitute for a Third-Party Special Needs Trust where larger sums of money can be set aside to meet the needs of children, grandchildren or other family members with disabilities. The primary concern for most parents is what will happen to their children after the parents are gone. Monies in an ABLE account would not be sufficient to provide a very comfortable lifestyle for children with disabilities. A Third-Party Special Needs Trust is a much better vehicle for larger sums of money.
[1] H.R. 5771.
The post 20 THINGS YOU NEED TO KNOW ABOUT ABLE ACCOUNTS first appeared on SEONewsWire.net.]]>by Thomas D. Begley, Jr., Esquire, CELA
Congress enacted and the President has signed legislation known as the Achieving a Better Life Experience (ABLE) Act of 2014.387 The Act is modeled on 529 Plans and will provide tax-favored accounts for individuals with disabilities to pay for qualified expenses. Before these accounts can be implemented, two things must happen: (1) the federal government must adopt regulations governing the accounts, and (2) state must either create their own ABLE accounts or contract with other states to do so. It is likely that these accounts will operate in a manner similar to existing 529 accounts.
The advantages of ABLE accounts are as follows:
There are a number of disadvantages to these accounts. The disadvantages to these accounts are as follows:
A Third Party Special Needs Trust is always a better solution for larger sums of money. In many instances, a Third Party Pooled Trust might be a better alternative than an ABLE account. Presumably, an ABLE account would be managed by either the disabled beneficiary or a parent or other family member. If distributions from the account were made improperly, this would presumably cause a loss of public benefits.
387 I.R.C. §529A.
The post ADVANTAGES AND DISADVANTAGES OF ABLE ACCOUNTS first appeared on SEONewsWire.net.]]>by Thomas D. Begley, Jr., Esquire, CELA
On December 16, 2014, Congress enacted and sent to the President for signature an Act known as Achieving a Better Life Experience (ABLE) Act of 2014.[1] This Act is to provide a tax-favored account, similar to a 529 Plan, for individuals with disabilities to pay for qualified expenses. The effective date of this legislation is December 31, 2014. Highlights of this Act are as follows:
[1] H.R. 5771.
The post 10 THINGS YOU NEED TO KNOW ABOUT ABLE ACCOUNTS first appeared on SEONewsWire.net.]]>