SALEM – The Oregon State Treasury is laying the early groundwork for a new system that will help improve the financial security of disabled Oregonians and their families and caregivers.
Thanks to a law passed by the 2015 Legislature, participating families of disabled minors will be able to set aside money in tax-advantaged savings accounts to pay for an array of disability-related expenses, beginning in the first quarter of 2017.
The law creates 529-ABLE accounts, which will allow families and caregivers to set aside money in accounts like the 529 plans that parents and grandparents use today to save for higher education and job training. In addition, money saved in the new 529-ABLE accounts specifically won’t jeopardize a person’s ability to qualify for vital federal assistance and services that assist people with disabilities.
“At the State Treasury, we care about the financial security of every Oregonian,” said State Treasurer Ted Wheeler. “ABLE-529 accounts will make it easier for families that already face severe challenges to save for their expenses and to improve their quality of life.”
"People with disabilities can earn money and want to save it. They should not be locked into poverty. ABLE-529 accounts will help individuals with disabilities and their families save and still access the services they need," said state Sen. Sara Gelser, D-Corvallis, chief sponsor of Senate Bill 777, the legislation that created the Oregon option.
The State Treasury will oversee the program in conjunction with the state’s existing education savings network, and is in the process of unveiling a new name and logo that reflects the expanded focus.
· The citizen panel that oversees the program has been renamed as the Oregon 529 Savings Board. It was formerly the Oregon 529 College Savings Board.
· The state administrative office for the program will be known as the Oregon 529 Savings Network, and the website for the network is in the process of being updated.
· A new logo featuring silhouettes of Oregonians was unveiled to the Oregon 529 Savings Board this month. A copy of that image is attached.
In the coming year, the Oregon 529 Savings Board will approve rules for the new program and select a private sector manager to handle the investment accounting and create the menu of investment options that will be available for 529-ABLE savers. Treasury also is conducting wide outreach with the goal of ensuring the plan meets the needs of all potential participants.
Under Senate Bill 777, which was passed and signed into law in July, assets that are deposited in a 529-ABLE account can be invested, grown and distributed tax-free as long as they are used to pay qualified expenses, such as education, housing, transportation and health prevention and wellness. Under the Oregon law, contributions are deductible on Oregon income taxes until the designated beneficiary reaches 21 years of age.
The legislation passed unanimously and was endorsed by Treasurer Wheeler and organizations statewide that assist disabled children and adults.
Beneficiaries will be allowed to save as much as $100,000 in ABLE-529 accounts without impacting their Social Security benefits. Medicaid eligibility would never be affected. Under the current federal threshold, Medicaid and Social Security eligibility is cut off once someone has saved more than $2,000.
ABLE-529 accounts were authorized by a federal law in December 2014, known as the Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act.
The Oregon 529 program was started in 2001 to help families save and invest for qualified education expenses. It was relaunched in 2010 with a new investment manager for the direct-sold option, and enhanced oversight.
The accounts are named “529 plans” after the section of the Internal Revenue Code that authorizes them.
As of Sept. 30, accounts had been created in the Oregon 529 Savings Network on behalf of 156,810 separate beneficiaries to help pay for higher education and job training costs. Those combined accounts totaled more than $2.2 billion. For the 2015 tax year, those who save in a 529 account can deduct as much as $4,600 on their Oregon taxes for married filers, and $2,300 if filing separately.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies and direction are set by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices.
