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Massachusetts Society of CPAs publishes “Year End Special Needs Planning”

Thanks to the new tax law, there’s a more robust toolbox available to people looking to provide financial support to disabled family members.

To qualify for federal assistance programs, people with disabilities typically can’t exceed a strict dollar cap limiting their assets. But changes in the rules governing both ABLE accounts and 529 tuition savings plans are now providing the disabled with a bit more financial flexibility.

These new options are best used in conjunction with traditional planning vehicles such as special needs trusts.

Here’s what’s changed:

  • Created in 2014, Achieving a Better Life Experience—or ABLE—accounts can be used to pay for qualified disability expenses without triggering taxes or disqualifying a disabled person for federal benefits. The current annual contribution limit is $15,000, but starting this year ABLE account beneficiaries can boost those contributions by up to $12,410 if of their own earnings. Such additional contributions can’t exceed income earned and are only available if the employee doesn’t get workplace retirement benefits.
  • Another enhanced planning strategy involves 529 plans, which for the first time can be rolled over into ABLE accounts. Moreover, use of 529 plans has been broadened to include educational expenses in both public and private schools from grades K to 12 and may include special-needs expenses.
  • There also may be opportunities for ABLE account beneficiaries who contribute to their own accounts to qualify for the “saver’s credit.” This credit is helpful if the beneficiary has enough income to trigger income taxes.

This article was previously published by the Massachusetts Society of CPAs.

About the Authors

Kristin Shirahama
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Kristin Wildman Shirahama

Kristin Shirahama, Private Client Practice Area Leader, is a Massachusetts trust and estate lawyer with over 20 years of experience who uses her listening skills, empathy and knowledge of the law to help individuals and families with difficult estate and gift planning concerns. Trustees, guardians and other fiduciaries regularly rely on Kristin for trust and estate administration, and she often serves as trustee and executor or personal representative. 

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About the Authors

Kristin Shirahama
Stay Connected
LinkedIn

Partner

Kristin Wildman Shirahama

Kristin Shirahama, Private Client Practice Area Leader, is a Massachusetts trust and estate lawyer with over 20 years of experience who uses her listening skills, empathy and knowledge of the law to help individuals and families with difficult estate and gift planning concerns. Trustees, guardians and other fiduciaries regularly rely on Kristin for trust and estate administration, and she often serves as trustee and executor or personal representative. 

Stay Connected
LinkedIn

More Posts by Author ›

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