What is a key benefit of a 529A ABLE account?

A 529A ABLE account offers tax-free growth as a key benefit. This means that any earnings generated within the account are not subject to federal income tax, provided that the funds are used for qualifying expenses related to disabilities. This can significantly enhance the savings potential for individuals with disabilities, enabling them to maintain their eligibility for government benefits while saving for expenses such as healthcare, housing, and education.

While tax-deferred growth allows investments to grow without being taxed until withdrawals are made, in the context of a 529A ABLE account, the essence of the advantage lies in the immediate tax-free benefits on contributions and earnings for qualifying expenses. Additionally, unlike options involving pretax contributions or taxation at lower rates, the fundamental nature of the 529A ABLE account allows funds to grow without any tax burden, promoting savings and financial stability for individuals with disabilities.