Looking for information on what and how we can save for special need kids with pre tax ? what is tax-advantaged ABLE account , do i qualify?

[AmyC · Accepted solution]

The ABLE account is a way to allow savings to grow without being taxed and the first $100,000 is not considered personal assets when applying for government aid. Disability occurring under the age of 26 will qualify. Contributions may qualify for a saver's credit and your state may have a credit or deduction as well.

See:

• What are ABLE Accounts? Tax Benefits Explained - TurboTax
• SPOTLIGHT ON ACHIEVING A BETTER LIFE EXPERIENCE | SSA
• ABLE Accounts - Tax Benefit for People with Disabilities | IRS

If you want to reply with the state, we can check that for you.

[dankesh]

Thanks Amy for details answer and adding all relative links. i live in California.

What i understood that it is ok to keep 100k in his account as it will not affect his capabilities to get government benefits and i can use this fund for his medication/support ?

i think it is pre tax money and can i contribute for 2020 with ABLE account opened today (04/07/21) ?

What should i plan for his betterment and should i enroll him to any government benefits right now or eligible ?

[ReneeM7122]

You're correct.  

You can keep 100k in his account as it will not affect his capabilities to get government benefits.  You can use this fund for his medication/support, and it is considered pre tax money.  However you can contribute only for 2021 since it was not opened in 2020.

To enroll him to government benefits right now, you would need to contact your State social services department for information and guidance.

[Lee811]

Does contributions to the Washington State Developmental Disabilities Endowment Trust Fund count as an ABLE account?

[AmyC]

No, see ABLE Act and DD Endowment Trust | Informing Families for the complete set of differences.

@Lee811

[Scott-AZ]

I live in Arizona and a Bill was passed this year that now allows ABLE contributions (up to a certain limit) to be deducted from your AGI. 

The retroactivity paragraph says "This act applies retroactively to taxable years beginning from and after December 31, 2020."

Does this mean I can amend my 2020 taxes to include the contributions I made in 2020?  If so, can I use the TurboTax 'amend a return' feature?

Thanks in advance!