New Jersey Governor Chris Christie has signed ABLE legislation. Paul Nichols reports at The Bergen Record:
Legislation sponsored by Assembly Democrats Pamela Lampitt, Majority Leader Louis Greenwald, Valerie Vainieri Huttle, Daniel Benson and Vince Mazzeo to create tax-free savings accounts for individuals with developmental disabilities was signed into law on Monday.
The new law (A-3956) requires the Department of Human Services and the Department of the Treasury to establish the “New Jersey Achieving a Better Life Experience” (ABLE) program in accordance with the federal “Achieving a Better Life Experience Act of 2014,” which President Obama signed into law in December 2014. Under the program, individuals with certain disabilities will be permitted to establish ABLE accounts that may be used to pay certain disability-related expenses. ABLE accounts will be exempt from state income taxation and will not be included as an asset or income when determining the individual’s eligibility for state assistance programs.A few days earlier, Autism Speaks reported:
Governor Andrew Cuomo has signed ABLE legislation that will allow families the opportunity to set up tax-free 529A savings accounts for disability-related expenses. The New York State Assembly and Senate passed the legislation in June.
The bill follows upon enactment by the federal government of the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014. Modeled after college savings accounts, ABLE accounts will enable people with autism and their families to save for housing, education, transportation, medical and other expenses if related to their disability. Assets in ABLE accounts will be exempt from a $2,000 cap on conventional savings accounts; exceeding that cap voids eligibility for Medicaid and Supplemental Security Income (SSI) benefits.
“We are grateful for Governor Cuomo’s support for ABLE in New York. New York families will have access to an important new financial tool for their loved ones with disabilities,” said Stuart Spielman, senior policy advisor and counsel at Autism Speaks. “This victory would not have been possible without the dedication of our grassroots network across the state and the leadership of Senator David Carlucci and Assemblymember Aileen Gunther.”Anne Tergesen report at The Wall Street Journal:
A year ago, Congress created the 529 ABLE account, a savings vehicle for disabled people that offers the same tax-free growth available in 529 college-savings plans. Now, thanks to a tax law passed last month, consumers eligible to open a 529 ABLE account will be free to select a plan sponsored by any state, rather than being restricted to their home state’s plan.
That change will make it possible for people across the country to start one of these accounts as soon as the first state program opens for business—something that is likely to happen in the coming months.
For families that can fund a special-needs trust, deciding whether to use that or a 529 ABLE account—or both—is complicated. Because these trusts typically cost from $2,000 to $5,000 to set up, they often make sense only if there is at least $50,000—and potentially far more—available to invest, said [tax attorney Jamie] Canup.
With the trusts, investment gains are taxable. But families can make unlimited contributions without affecting a beneficiary’s eligibility for government benefits.
Perhaps the biggest downside to an ABLE account applies to beneficiaries who receive Medicaid. If beneficiaries die with money in ABLE accounts, a state has a right to seek repayment for Medicaid benefits received after creating the ABLE account. In contrast, when the beneficiary dies, a special-needs trust isn’t required to reimburse the state for Medicaid benefits—unless the beneficiary funded the trust with his or her own earnings or savings.