Is a PA ABLE Account Right for You?

Mother, son, and father smiling and embracing

Selena is a 24-year-old young woman who happens to have autism and an intellectual disability. Because of her disabilities, she has a Person/Family Directed Support Waiver and Medical Assistance.

Selena has worked for 6 years as a part-time employee at a print shop in Camp Hill, PA. She is interested in getting a full time job and in buying a car so she can have more independence traveling to work.

Since Selena has a waiver and receives Medical Assistance, regulations prohibit her from having more than $2,000 in assets (i.e., money in checking or savings accounts, etc.). Right now, she keeps the money she is saving to buy a car in a box under her bed. She would rather have it in a safe place where she can get it when she needs it to buy a car! Selena would like to have a savings account, like her sister, but her family knows that if she has more than $2000 in assets she may lose her government benefits.

In PA, Selena could open a PA ABLE account to save money and withdraw it when she needs it for a qualified disability expense.

PA ABLE accounts offer a tax-free way to save money for disability-related expenses. It allows a person with a disability to save up to $15,000 each year while keeping disability-related benefits, such as Social Security Income and Medical Assistance.

Frequently asked questions about PA ABLE:

  • What is a PA ABLE account and who can have one?
    • A PA ABLE account gives individuals with qualified disabilities, and their families and friends, a tax-free way to save for disability-related expenses, while maintaining government benefits. This means that it is a savings plan that protects public benefits.  The PA ABLE website also offers an eligibility quiz!
  • How to use a PA ABLE account:
    • You can contribute up to $15,000 each year, or contribute more with earned income up to an account maximum balance of $511,758
    • Once the account limit is reached, no additional contributions can be made, but interest can still be earned
    • Families and friends can also contribute to a PA ABLE account
    • Learn more about these restrictions in Cents and Sensibility, a book put together by the Pennsylvania Assistive Technology Foundation and on the PA ABLE website.
  • What are the tax advantages to having a PA ABLE account?
    • you don’t owe federal or Pennsylvania income tax on saving’s growth when held in the account – meaning you defer paying taxes on it,
    • when you withdrawal for “qualified disability expenses” you can get a tax exemption, and
    • the entire account is exempt from Pennsylvania inheritance tax.

For more resources about PA ABLE check out the links below:

https://www.paable.gov/

http://www.studymoney.us/#/Home

https://patf.us/what-we-do/financial-education/

https://www.paable.gov/eligibility/

The PEAL Center Announces New Executive Director

[vc_row][vc_column][vc_column_text]Contact:  Anya Fredrickson Communications, The PEAL Center [email protected] 412- 281-...