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Friday, September 19, 2014
Deal Reached On Tax-Free Disability Savings Accounts
Federal lawmakers say they've reached a deal to move forward on legislation that would establish a new way for people with disabilities to save money without jeopardizing their government benefits.
Members of the U.S. Senate said Friday that they have an agreement that will allow the Achieving a Better Life Experience, or ABLE, Act to proceed.
The bill’s chief sponsors and leaders of the Senate’s Committee on Finance said in a joint statement that they expect the legislation to be considered when Congress returns to Washington in November.
“We are committed to working with our House colleagues to ensure this legislation will be passed in a bipartisan, bicameral manner and sent to the president’s desk in the lame duck session,” read the statement from Sen. Ron Wyden, D-Ore., Sen. Orrin Hatch, R-Utah, Sen. Bob Casey, D-Pa., and Sen. Richard Burr, R-N.C.
Under the measure, people with disabilities would be able to create special accounts at any financial institution where they could deposit up to $14,000 annually. The ABLE accounts could accrue up to $100,000 in savings without risking an individual’s eligibility for government benefits like Social Security. What’s more, Medicaid coverage could be retained no matter how much money is deposited in the proposed accounts.
Modeled after the popular 529 college savings plans, funds deposited in ABLE accounts could be used to pay for education, health care, transportation, housing and other expenses. Interest earned on savings within the accounts would be tax-free.
The ABLE Act has been under consideration in Congress since 2006 and is sponsored by more than half the members of both the U.S. House of Representatives and the Senate.
Nonetheless, when the bill was approved by a House committee in July, lawmakers indicated they would need to reach an agreement on how to pay for the measure before it would be put up for a floor vote.
The deal reached this week will “serve as the foundation for final passage,” the senators said.