Some Pennsylvania residents receiving disability benefits may soon find it easier to set aside money for future expenses through a tax-exempt savings program.
The proposal from the Pennsylvania Treasury Department calls for allowing individuals to save up to $14,000 a year to pay for a wide range of disability-related expenses.
Doug Rohanna, a deputy state treasurer, says the accounts will work much like 529 college savings plans.
“Savings would be made with post-tax dollars and savings would grow tax free and when used for qualified expenses they would be tax exempt,” said Rohanna.
Restrictions can make it difficult for people who receive disability benefits to save more than $2,000 without jeopardizing those benefits.
Susan Tachau is the executive director of the Pennsylvania Assistive Technology Foundation, an alternative financing program for Pennsylvania’s disabled residents.
“Often we find that people simply don’t have the money they need in order to buy the device that makes a real difference to their life,” said Tachau. “Whether it’s an adapted vehicle or a home modification or hearing aid, whatever it is, many of the people we serve are limited with their income.”
Through the proposed program, individuals could save up to $100,000 in a tax-exempt account and still keep their disability benefits. The legislature must still approve the plan, and the accounts would be available only to those diagnosed with a disability before the age of 26.
Earlier this year, President Obama signed the Achieving a Better Life Experience or ABLE Act, which authorizes states to establish tax-exempt savings accounts.