Dodd Proposes Disability Savings Accounts

A Dodd news release said the Disabilities Savings Act of 2008 will provide a vehicle through which families can invest their money and receive tax breaks including a refundable tax credit for low-income savers.

According to the announcement, the account can be managed by the beneficiary, a spouse or family member, or a legal guardian through a financial institution. Beneficiaries of the account must be determined to be blind or disabled by the Social Security Administration or the disability determination service of a state and be under the age of 65 

Under the bill, beneficiaries or their representative could spend funds directly from the account for services and assets in a DSA would not be counted against eligibility for Medicaid and SSI or other federal support services.

“This important legislation is designed to help individuals with disabilities live full and productive lives for all their years,” said Dodd, in the news release.  “It provides families with an important tool to save the money they need for their unique needs and provide for their children long after they are gone.”

Other provisions of the proposed measure include:

• Funds from the DSA used for services such as education, medical services, employment training and support, transportation, and other related services will be tax-free.
• Interest on accounts with a balance of $250,000 or less is tax free.
• Funds from college savings plans and special needs trusts for the same beneficiary can be rolled into the DSA without penalty.

More information is available here .