Disabled Americans may want to save their stimulus money in an ABLE account
Thomas Barwick | Stone | Getty Images
For the first time, adult relatives can perform a stimulus check.
A year after the pandemic began, many have an immediate need for funds. People with disabilities who want to save their stimulus money could instead consider depositing it into what is known as an ABLE account.
This tax-privileged, government-sponsored savings account enables disabled people to set aside up to $ 15,000 per year without losing key government benefits like Medicaid. The total savings limit varies from state to state, but anything above $ 100,000 will result in a suspension of social security benefits for the disabled.
To qualify for state aid, an individual’s assets outside of their ABLE account are generally capped at $ 2,000.
More from Invest in You:
Covid bill to waive tax on US $ 20,400 unemployment benefits for couples
Here’s what you need to know about filing an amended tax return
The majority of US women are burned out. Here’s how to deal with it
“The ABLE account allows you to extend the stimulus check,” said Charlie Massimo, senior vice president of the Wealth Enhancement Group based in Plymouth, Minnesota.
“You’re not going to have to spend it in 12 months.”
The new entitlement is part of the US $ 1.9 trillion rescue plan that has just been passed by Congress and is awaiting signature by President Joe Biden. So far, only people under the age of 17 have received payments.
Up to 26 million adult family members – including disabled adults, students, and the elderly – would be affected, according to a May report by the American Enterprise Group.
“Financial support for the rest of your life”
For Massimo, the ABLE plans were a lifeline. Two of his 21 year old triplets have autism and money in these accounts. They plan to deposit part of their stimulus money with them as well.
The money in the accounts can be spent on qualified disability expenses and includes housing, food, transportation, health care, and other things that can help improve the quality of life, according to the ABLE National Resource Center.
An ABLE account is different from a special needs trust whose expenses don’t include as many allowances, Massimo said.
“As a parent, you have a responsibility to take care not only in the short term but also in the long term,” he said.
“My boys will need financial support for the rest of their lives,” added Massimo. “As parents, we have to make up for that.”
They are really a critical savings mechanism for people with disabilities.
Senior Director of Income Policy at The Arc
Interest in the plans has already increased.
As of December 31, there were 82,019 accounts with ABLE accounts for $ 643 million, according to ISS Market Intelligence, a division of Investment Advisor Institutional Shareholder Services.
This equates to assets of $ 538 million distributed across more than 75,000 accounts as of September 30th.
Still, many are still unaware of the benefits of ABLE accounts.
“They really are a critical savings mechanism for people with disabilities,” said Bethany Lilly, senior director, income policy at The Arc, a nonprofit advocating for people with disabilities.
“I would like to see a bigger enrollment”
More can also be done to give disabled Americans access. Currently, only those who had a disability before the age of 26 qualify.
Legislation introduced in the Senate and House of Representatives in 2019 increased that age to 46, but more action remains to be taken.