Savings Opportunities for Students With Special Needs

Saving for a child's or grandchild's college can be complicated enough, but things become even more complex when that child has a disability. Often times, families aren't sure if the child will pursue higher education or decide to take another path instead. But perhaps the biggest challenge individuals with special needs face is being able to save enough for college without having to forfeit government benefits. If a person with a disability earns more than $700 per month, or has savings or other assets in excess of $2,000, they risk losing eligibility for programs like Medicaid. Because of these roadblocks, parents who have children with special needs have to look beyond traditional bank and investment accounts in order to build substantial savings. Historically, one of the only options available was a special needs trust, which can be an effective savings tool for families but has limitations such as the inability to fund housing and food expenses and costs and perceived complexity associated with trusts. And as a result, students with disabilities end up with little or no savings and no plan for college. Yet what these families should realize is that there are, in fact, a number of opportunities for students with disabilities to continue their education as well as save for it. Available higher education opportunities Kathleen Oberneder, Wealth Management Advisor at Crescendo Wealth Management, had worked several years in the financial services sector prior to her daughter Emily being born with Down syndrome. Having two older daughters, Oberneder clearly understood the higher education planning process, but she wasn't sure where to start when it came time to plan for Emily's future. However, she was pleasantly surprised when she discovered that there are actually a number of high education opportunities across the country for Emily and other students who have disabilities. In fact, there are currently over 200 university programs offering programs that cater to individuals with special needs. 529 college savings plans One way for families to save for college for a child with special needs is with a 529 plan. To avoid affecting the asset limitations mentioned above, parents or grandparents should be listed as the account owner, with the child named as the beneficiary. With a 529 plan, investment earnings will grow tax-free as long as the funds are used toward the beneficiary's college expenses. And in the event that the child decides not to go to college, the beneficiary can be easily changed to another family member. RELATED: What is a 529 plan? 529 ABLE accounts Additionally, a new savings option was recently introduced, 529 ABLE Accounts, which were made available through the passage of the Steven Beck Jr. Achieving a Better Life Experience Act. This law was effective December 2014 but accounts have only been made available as of June 2016. Currently, there are four states that offer ABLE Accounts ï ¿ ½ Florida, Nebraska, Ohio and Tennessee, and these plans are available to families nationwide. Essentially, the ABLE Act allows individuals who have been diagnosed with a disability before the age of 26 to save money in ABLE accounts and not jeopardize government benefits. Tax-free distributions from an ABLE account may be made for ï ¿ ½qualified disability expenses.ï ¿ ½ The term ï ¿ ½qualified disability expensesï ¿ ½ permits the inclusion of basic living expenses with examples including costs for education, housing, transportation, employment training, and many others. 529 ABLE Accounts are the first savings tools available that formally recognize the added costs of saving for people living with disabilities, and recognize that their families often require more flexibility to care for their loved ones. Oberneder has made it her life's work to financially plan for families with special needs children and adults, and sees ABLE accounts as a way to fund and save for expenses that improve the quality of life for special needs families. One example is horse therapy, which can be a highly beneficial addition to treatment programs for children with autism. The rhythmic motion of riding a horse allows a rider to focus on the slow, deliberate, and calming movement. The child indirectly learns how to focus better, which is aided by the comforting effect of riding. These types of therapy are not covered by government benefits, but can paid for with funds from a 529 ABLE Account. It's important to understand that ABLE accounts don't necessarily have to replace existing accounts like 529 plans or other planning tools such as a special needs trust. However, ABLE accounts should be considered a tool and part of the overall special needs planning process. For additional eligibility information, requirements, limitations and resource links on ABLE accounts please visit http://www.crescendowm.com/p/able-accounts. RELATED: The ABLE Act and what it means for your 529 plan SECURITIES AND ADVISORY SERVICES OFFERED THROUGH LPL FINANCIAL, A REGISTERED INVESTMENT ADVISOR, MEMBER FINRA/SIPC. The LPL Registered Representative associated with this webpage may only discuss and/or transact securities business with residents of the following states: AZ, CA, CO, FL, IL, MN, NC, NE, PA, TX, VA, and WI. Third Party Post found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy and completeness. Author: Brooke Napiwocki, Wealth Management Advisor, Crescendo Wealth Management, Guest Contributor Brooke Napiwocki, CFPï ¿ ½, MBA is a Wealth Management Advisor at Crescendo Wealth Management in Southeastern, Wisconsin. She focuses her practice on professional women and couples who are seeking a holistic approach to financial and life planning. Brooke has advised individuals, small businesses, and institutional clients in the financial services industry for the past 15 years. Saving for a child's or grandchild's college can be complicated enough, but things become even more complex when that child has a disability. Often times, families aren't sure if the child will pursue higher education or decide to take another path instead. But perhaps the biggest challenge individuals with special needs face is being able to save enough for college without having to forfeit government benefits. If a person with a disability earns more than $700 per month, or has savings or other assets in excess of $2,000, they risk losing eligibility for programs like Medicaid. Because of these roadblocks, parents who have children with special needs have to look beyond traditional bank and investment accounts in order to build substantial savings. Historically, one of the only options available was a special needs trust, which can be an effective savings tool for families but has limitations such as the inability to fund housing and food expenses and costs and perceived complexity associated with trusts. And as a result, students with disabilities end up with little or no savings and no plan for college. Yet what these families should realize is that there are, in fact, a number of opportunities for students with disabilities to continue their education as well as save for it. Available higher education opportunities Kathleen Oberneder, Wealth Management Advisor at Crescendo Wealth Management, had worked several years in the financial services sector prior to her daughter Emily being born with Down syndrome. Having two older daughters, Oberneder clearly understood the higher education planning process, but she wasn't sure where to start when it came time to plan for Emily's future. However, she was pleasantly surprised when she discovered that there are actually a number of high education opportunities across the country for Emily and other students who have disabilities. In fact, there are currently over 200 university programs offering programs that cater to individuals with special needs. 529 college savings plans One way for families to save for college for a child with special needs is with a 529 plan. To avoid affecting the asset limitations mentioned above, parents or grandparents should be listed as the account owner, with the child named as the beneficiary. With a 529 plan, investment earnings will grow tax-free as long as the funds are used toward the beneficiary's college expenses. And in the event that the child decides not to go to college, the beneficiary can be easily changed to another family member. RELATED: What is a 529 plan? 529 ABLE accounts Additionally, a new savings option was recently introduced, 529 ABLE Accounts, which were made available through the passage of the Steven Beck Jr. Achieving a Better Life Experience Act. This law was effective December 2014 but accounts have only been made available as of June 2016. Currently, there are four states that offer ABLE Accounts ï ¿ ½ Florida, Nebraska, Ohio and Tennessee, and these plans are available to families nationwide. Essentially, the ABLE Act allows individuals who have been diagnosed with a disability before the age of 26 to save money in ABLE accounts and not jeopardize government benefits. Tax-free distributions from an ABLE account may be made for ï ¿ ½qualified disability expenses.ï ¿ ½ The term ï ¿ ½qualified disability expensesï ¿ ½ permits the inclusion of basic living expenses with examples including costs for education, housing, transportation, employment training, and many others. 529 ABLE Accounts are the first savings tools available that formally recognize the added costs of saving for people living with disabilities, and recognize that their families often require more flexibility to care for their loved ones. Oberneder has made it her life's work to financially plan for families with special needs children and adults, and sees ABLE accounts as a way to fund and save for expenses that improve the quality of life for special needs families. One example is horse therapy, which can be a highly beneficial addition to treatment programs for children with autism. The rhythmic motion of riding a horse allows a rider to focus on the slow, deliberate, and calming movement. The child indirectly learns how to focus better, which is aided by the comforting effect of riding. These types of therapy are not covered by government benefits, but can paid for with funds from a 529 ABLE Account. It's important to understand that ABLE accounts don't necessarily have to replace existing accounts like 529 plans or other planning tools such as a special needs trust. However, ABLE accounts should be considered a tool and part of the overall special needs planning process. For additional eligibility information, requirements, limitations and resource links on ABLE accounts please visit http://www.crescendowm.com/p/able-accounts. RELATED: The ABLE Act and what it means for your 529 plan SECURITIES AND ADVISORY SERVICES OFFERED THROUGH LPL FINANCIAL, A REGISTERED INVESTMENT ADVISOR, MEMBER FINRA/SIPC. The LPL Registered Representative associated with this webpage may only discuss and/or transact securities business with residents of the following states: AZ, CA, CO, FL, IL, MN, NC, NE, PA, TX, VA, and WI. Third Party Post found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy and completeness. Author: Brooke Napiwocki, Wealth Management Advisor, Crescendo Wealth Management, Guest Contributor Brooke Napiwocki, CFPï ¿ ½, MBA is a Wealth Management Advisor at Crescendo Wealth Management in Southeastern, Wisconsin. She focuses her practice on professional women and couples who are seeking a holistic approach to financial and life planning. Brooke has advised individuals, small businesses, and institutional clients in the financial services industry for the past 15 years.