New law allows tax-free investment accounts for disabled children
Federally recognized savings plans would help parents secure children’s future
STATE HOUSE – The General Assembly has approved and the governor has signed into law legislation sponsored by Sen. Adam Satchell and Rep. Robert A. Nardolillo III to enable the creation of tax-free investment accounts similar to 529 college savings plans to support services for disabled Rhode Islanders when they reach adulthood.
The legislation (2015-H 5564A, 2015-S 0465A) allows federally recognized, tax-sheltered ABLE accounts for disabled Rhode Island children, into which their families and friends could deposit money that will be invested on the child’s behalf. When the child reaches adulthood, the funds from the account could be used for qualified expenses such as education, housing, transportation and services like employment programs, personal support services, health prevention and wellness, financial management and more. The program can be used for individuals with disabilities including physical, developmental, or otherwise.
The ABLE program, which stands for “Achieving a Better Life Experience,” is a federal tax designation that allows the funds to be invested free of income tax, and allows the account not to count as assets for determining income eligibility for state or local assistance programs, including Medicaid programs.
The sponsors said the legislation addresses both the needs that the disabled face when they are no longer in school and related programs, and the challenges they face paying for them when many assistance programs require that they have little to no assets.
“When high school ends, families of people with disabilities often face challenges meeting their needs. Obviously, medical needs can be very expensive, but even the ones that are less complicated, like employment services or day programs can be cost-prohibitive, particularly since financial assistance programs generally require that the families have little to no assets. The ABLE program is an innovative way families can responsibly ensure a better life for their children without jeopardizing his or her opportunities for assistance in the future,” said Senator Satchell (D-Dist. 9, West Warwick).
Said Representative Nardolillo (R-Dist. 28, Coventry), “In addition to providing for their children’s physical needs in the future, the ABLE program will also give families some peace of mind, knowing that their children will be provided for in the future.”
The legislation is cosponsored in the Senate by Sen. Paul W. Fogarty (D-Dist. 23, Glocester, Burrillville, North Smithfield), Sen. Roger A. Picard (D-Dist. 20, Woonsocket, Cumberland), Sen. Edward J. O’Neill (I-Dist. 17, Lincoln, North Providence, North Smithfield) and Sen. Christopher Scott Ottiano (R-Dist. 11, Portsmouth, Bristol). The House cosponsors include Rep. Michael W. Chippendale (R-Dist. 40, Foster, Coventry, Glocester), Rep. Robert B. Lancia (R-Dist. 16, Cranston), Rep. Doreen Costa (R-Dist. 31, North Kingstown, Exeter) and Rep. Antonio Giarrusso (R-Dist. 30, East Greenwich, West Greenwich).
The sponsors credited State Treasurer Seth Magaziner and Secretary Elizabeth Roberts of the Executive Office of Health and Human Services for working closely on the legislation. The treasurer’s office will handle investing on behalf of the program, and the Executive Office of Health and Human Services will administer the program in Rhode Island. The Rhode Island Developmental Disabilities Council also contributed to crafting the legislation, they said.
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903