Answer: Massachusetts’ Educational Financing Authority (MEFA) offers a special investment program, called the ABLE program. ABLE accounts offer financial independence without the complexity of structuring a special needs trust. Fidelity manages these accounts, in which assets below $100,000 are not counted as a resource for for disabled individuals receiving to applying for SSI or Medicaid.
Similar to an IRA or a 529 college planning account, earnings and withdrawals for qualified expenses are free from federal and state tax. ABLE account funds can be withdrawn for medical and education needs, job training, and housing expenses. It is important to keep good records, to prove any withdrawn funds were used for eligible expenses.
Some requirements: only folks who were disabled before the age 26, may open an ABLE account. The maximum annual contribution is tied to the federal gift tax exclusion amount which is currently $15,000.
Fidelity offers a convenient cash management account linked to an ABLE account. Tools such as checks, or an ATM debit account are available.
Attorney James Haroutunian practices real estate law, estate planning and probate at 630 Boston Road, Billerica, MA. He gladly invites questions at firstname.lastname@example.org or by phone at 978-671-0711. This column is published for entertainment purposes only and not to be relied on as legal advice in any manner.