Equality. Americans have strived to open the door to its strength across generations of our nation’s history. No population may understand the dedication and footwork needed to realize a level playing field for its players more than the disabled.
Great strides have been made to ensure that fewer of the disabled fall through society’s cracks, but there is ample ground to cover before they have the same opportunities as other Americans. A good place to continue that fight is in the area of financial planning.
Today, the federal government encourages Americans to save for future needs through a variety of tax-advantaged savings accounts: individual retirement accounts, education savings accounts (529s), medical savings accounts and employer savings accounts (401k’s). With the right tools in place, life’s horizon can be brighter. Without them, dreams can pass by in the blink of an eye.
That’s why I am so encouraged by the growing number of supporters behind my Achieving a Better Life Experience (ABLE) Act to create tax-deferred savings accounts for the disabled. To date, 184 House members and 22 senators are co-sponsors of this legislation. Special Olympics, the National Down syndrome Society, Autism Speaks and National Fragile X Foundation are among a long list of organizations also supporting the bill. All understand the need to crack open a wider door to equality for the disabled.
The average cost of raising a child with a significant medical disability is more than $1 million over the course of the child’s lifetime. Continuing education, transportation, housing and medical care make up some of the predictable costs on that staggering bill.
ABLE accounts would relieve some of that burden by allowing parents with disabled children or family members of disabled individuals to invest through a tax-deferred savings account that could be drawn from for these future expenses. No longer would parents have to stand aside and watch as others use IRS-sanctioned tools like 529 education savings accounts to lay the groundwork for a brighter future. They would be able to do so for their children as well.
Creating an ABLE account would be as simple as opening an account at the local bank. Anyone currently receiving Supplemental Security Income (SSI) benefits would be eligible, and qualified expenses would include education and transportation expenses, medical and dental care, and employment and training support.
Anyone would be allowed to contribute to an ABLE account, and rollovers would be allowed without penalty; however, contributions to these accounts would be capped at $500,000. Under the proposal, the principal in the account would accrue interest-tax-free during the life of the beneficiary. When distributions were made to the beneficiary for qualified expenses, the distributions would be excluded from the gross income of the beneficiary.
In real life terms, that means young Sydney Leach, who was born with Down syndrome in Jacksonville, Fla., and is finishing first grade, could plan for her future. A bright student who can read, write and perform simple arithmetic, she hopes to gain a postsecondary education. Eventually, Sydney will work and earn a salary just as millions of other Americans do. Under current law, however, she cannot keep more than $2,000 in assets (whether earned or through gifts) or she will lose her benefits, such as Medicaid and Social Security Disability Insurance. With an ABLE account, that roadblock would be lifted, enabling her to save and use her earnings to cover qualified expenses.
The cost to reform the U.S. Tax Code to offer ABLE accounts would be minimal, but the positive impact for Sydney Leach, her family and others who are struggling to cope with an uncertain future would be sizable.
They and all the disabled deserve that opportunity. A change in the tax code so they can “achieve a better life experience” is a step forward toward equality with every other American - a step worth taking.
Rep. Ander Crenshaw is a Republican member of the U.S. House of Representatives from Florida.