Financial Planning
Congress Creates New Tax-Favored Savings Accounts for Disabled
As part of its last moves before the holidays, the lame duck Congress and Senate passed the Tax Increase Prevention Act of 2014, which primarily focused on many tax deductions and credits that had technically expired at the end of last year.
Dec. 17, 2014
As part of its last moves before the holidays, the lame duck Congress and Senate passed the Tax Increase Prevention Act of 2014, which primarily focused on many tax deductions and credits that had technically expired at the end of last year.
With the legislation, those tax breaks are re-enacted for the 2014 tax year from January 1 through Dec 31.
Congress also passed the appropriately-named Achieving a Better Life Experience Act of 2014 (ABLE),which authorizes states to create tax-favored accounts for disabled individuals similar to the way that Section 529 plans are used for college savings.
For tax years beginning after 2014, distributions are tax-free if used to pay for qualified expenses such as medical costs, education, transportation and housing.
Also, ABLE permits a contributor or designated beneficiary of a 529 account to change investment direction up to two times a year. Previously, only one change was allowed.