Helping Disabled Americans and Their Families Save Through the ABLE Act

Dale Brown, President and CEO, Financial Services Institute
December 28, 2016

When we say that the Financial Services Institute (FSI) is working to make sure all Americans have access to professional, objective financial advice, we mean all Americans.

This commitment is the driving force behind our staunch support for three bills currently working their way through Congress that will provide and protect saving and investment opportunities for disabled Americans and their families.

The three bills are amendments to the ABLE Act, which allows individuals with disabilities, and their families, to put money away for qualified disability expenses on an after-tax basis — allowing the earnings in these accounts to grow tax-deferred — under the portion of the tax code that established 529 college savings programs without jeopardizing their eligibilities for federal public benefits. The original law received support from 381 out of 435 U.S. representatives and 78 out of 100 senators and was signed into law in December 2014 after a concerted decade-long advocacy effort by a cross-disability grassroots coalition.

This incredible advocacy achievement stands to benefit an estimated 54 million Americans.

Even with such overwhelming support in the House and Senate, though, the fight to secure savings and investment opportunities for America’s disabled citizens and their families goes on. FSI is currently working with the National Down Syndrome Society and the ABLE Alliance for Financial Empowerment to build support for the three new amendments, which would add critical protections to the 2014 law in order to ensure broad access to ABLE Act benefits for those who need them most.

The three amendments are explained below.

  1. The ABLE to Work Act: This bill would allow disabled workers to save approximately $12,000 over the current federal gift tax contribution limit of $14,000 per year to ABLE accounts, thereby helping them more effectively save money to deal with disability-related expenses.
  2. The ABLE Financial Planning Act: This amendment would allow assets in 529 college savings accounts to be rolled over tax-free to qualified ABLE accounts. Because many disabilities do not manifest themselves until later in a child’s or young adult’s life, the lack of this key protection means that assets in 529 plans — which many parents and relatives open as soon as a child is born — can become stuck there once the disability is diagnosed. This common-sense change would remove that roadblock for families with special-needs children.
  3. The ABLE Age Adjustment Act: This measure would provide additional protection for those who experience the onset of disabilities later in life or who become disabled due to injuries or accidents. The bill would raise the age limit on ABLE Act benefits from 26 years old to 46.

We have been very proud to work alongside our coalition partners this year to build legislative support for these crucial amendments, and we were happy to leverage our relationships on the Senate Finance Committee to get the ABLE to Work Act and ABLE Financial Planning Act passed by that body in September. We are now working with members of the House Ways and Means Committee to secure their support in Congress, and we are also committed to strengthening support for the ABLE Age Adjustment Act in order to secure passage for that measure.

In addition, the effective relationships we have developed with state legislators as a result of our focused efforts to engage with statehouses across the country have also helped us to move the ball forward on this crucial issue. While the ABLE Act provided for the creation of tax-advantaged accounts for people with disabilities and their families at the federal level, the work of actually establishing those programs was entrusted to the states. It is vital, therefore, that state legislators understand the important benefits ABLE accounts stand to offer their constituents and work diligently to make those programs available as quickly as possible.

Five states — Ohio, Florida, Tennessee, Nebraska and Michigan — have already established ABLE programs. FSI, in coordination with the National Down Syndrome Society and our other alliance partners, is working with a number of additional states — including Alaska, Arizona, Georgia, Indiana, Illinois, Kentucky, Pennsylvania, South Carolina, South Dakota, Washington and Virginia — to help them set up programs, as well. We hope to see many of these states make ABLE accounts available to residents by the end of this year.

Independent financial advisors are more than trained professionals who provide valuable services to investors — they are caring, trusted counselors who form profound personal relationships with the clients and families they serve. This is especially true for advisors who work with those extraordinary families that support disabled children or other family members. We are very pleased to be working at both the state and federal levels to establish common-sense legislation that will remove many of the roadblocks these families have previously encountered in their efforts to care for their disabled loved ones — and help them face their financial futures with confidence.