A bill that would create tax-deferred savings accounts for people with special needs has been introduced in the House and Sen...Read more
Bipartisan Bill Proposes Savings Accounts for Individuals With Special Needs
On March 12, 2008, Senators Orrin Hatch (R-NV) and Bob Casey (D-PA) introduced S.2743, a bill that would create special tax-exempt savings accounts for individuals with disabilities. The proposed accounts are similar to IRAs and 529 College Savings Plans in that the interest in the accounts would accumulate tax-free during the beneficiary'™s lifetime.
Under the senators'™ plan, anyone eligible to receive Supplemental Security Income (SSI) benefits could create an account that can hold up to $500,000. The assets in the accounts will not count against a beneficiary'™s SSI asset limit and when distributions are made from the accounts for a beneficiary'™s "qualified expenses," the payments will not count as the beneficiary'™s income and, therefore, will not render the beneficiary ineligible for government benefits. These qualified expenses include medical and dental care, education, housing, transportation, and adaptive technology, among others.
Although he says the savings accounts are a step in the right direction, Andrew Riggle, a public policy advocate for the Disability Law Center, expressed some reservations about them.
"Many individuals with disabilities, and quite often their families as well, would be considered low-income individuals and low-income families," Riggle says in an article on the Web site of Utah public radio station KCPW. "So, how much disposable income are they going to have available to put away in a savings account like this?" Riggle also fears the program could be used as an excuse for the federal government to push more of the costs of assisting disabled individuals onto states and families.
A similar bill introduced last year in the House by Representative Ander Crenshaw (R-FL), H.R.2370, currently enjoys bi-partisan support and has 80 cosponsors.
To read the Senate bill, click here.
For a press release from Sen. Hatch'™s office on the Senate bill, click here.