This year, one of the biggest developments in financial services will be the introduction of the first ABLE Act accounts by several states. You can check the status of ABLE Act implementation in your state.
Overview: The federal ABLE Act authorizes states to create investment accounts under Section 529A of the federal tax code. These accounts allow "contributors" to set side up to $14,000 per year (the annual gift tax exclusion) post-tax in accounts owned by eligible individuals with disabilities.
Access to public benefits such as Medicaid are not affected as long as account balances do not exceed $100,000. Earnings are tax-deferred and distributions are tax-free if taken for qualifying expenses. (Otherwise, distributions of earnings are taxable and subject to a 10 percent penalty.)
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