PA Will Offer Tax-Exempt Savings Account for People with Disabilities
(From PA529.com/able) People with disabilities and their families face many challenges. Among them are planning for a financially secure future and saving for disability-related expenses. The Pennsylvania Achieving a Better Life Experience Act (PA ABLE), which was passed by the General Assembly on April 13, 2016 will provide families with a savings account without jeopardizing eligibility for important programs that their loved ones depend on.
The PA ABLE Act passed both the House and Senate unanimously; and was signed by Governor Wolf on April 18.
PA ABLE savings account benefits may include:
- Save up to $14,000 each year.
- Savings grow tax-free.
- Use account to pay for a wide range of disability-related expenses.
- Withdrawals will be exempt from federal and state income tax when used for qualified disability expenses.
- Accounts would be exempt from inheritance tax.
- ABLE savings are excluded from eligibility determinations for Supplemental Security Income (SSI) benefits (savings up to $100,000), other means-tested federal programs, Medical Assistance, and other state means-tested disability and health benefits.
A second bill (HB1319) that would allow ABLE contributions (up to $14,000 annually) to be deducted from Pennsylvania state income tax is working its way through the legislative process. It passed the Senate unanimously but needs the concurrence of the House.
The federal Achieving a Better Life Experience (ABLE) Act was enacted in December 2014: https://www.congress.gov/113/bills/hr5771/BILLS-113hr5771enr.pdf (Division B at page 47). It provides federal tax and other benefits to eligible individuals with disabilities who save to meet qualified disability expenses through ABLE savings programs offered by states.
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