COLLEGE SAVINGS 101

Savingforcollege.com

6 things to consider when selecting an ABLE account
http://www.savingforcollege.com/articles/6-things-to-consider-when-selecting-an-able-account-1024

Posted: 2017-02-02

by Kathryn Flynn

Nearly one in five people in the U.S. are living with a disability, according to the CDC. 529 ABLE plans allow these individuals to save money in a tax-advantaged count in order to pay for education, assisted technology, transportation and other expenses that help them get and keep jobs, improve their health and participate in social activities.

With ABLE accounts, owners and beneficiaries have more choice and control when it comes to their investments than ever before. And ABLE accounts can also be a great supplement to other types of income and savings, including special needs trusts and government assistance like Social Security Income (SSI) and Medicaid.

Today, there are 17 different tax-advantaged ABLE plans available, each offering unique features and benefits designed to help individuals build substantial savings and achieve financial independence. Savingforcollege.com is in the process of creating detail pages for each ABLE plan, but in the meantime you can refer to the Table on page 2 for a quick summary of whatís available.

As you review your options, here are six things to consider before selecting a plan:

  1. Determine eligibility. To qualify for an ABLE account, individuals must meet the following requirements:
    • Diagnosed with a disability before age 26 and currently receiving SSI and/or SSDI
    • OR
    • Diagnosed with a disability before age 26 and meet Social Security requirements and be able to obtain a disability certification from a doctor
  2. Know how much you can invest. Contribution limits for ABLE plans are similar to limits for 529 college savings plans. For 2017, total annual contributions for an account are limited to $14,000, which is also the amount of the annual gift tax exclusion. Lifetime limits mirror the stateís limits for 529 savings plans, which range from $265,000 to $511,000. However, keep in mind that if youíre receiving SSI, your $2,000 cash benefit will be suspended once the account exceeds $100,000.
  3. Find out if your state offers tax benefits. ABLE accounts offer federal tax-free growth and wonít be taxed at withdrawal when the funds are used to pay for disability expenses. In addition to this, six states currently offer a state tax deduction for contributions made to an ABLE plan.
  4. Understand the planís fees and expenses. When shopping for an ABLE plan, itís important to know how much youíll be charged for things like account maintenance, rollovers and investment choices. The less you pay in fees, the more youíll be able to save. To see each planís total expense ratio, refer to the table on page 2.

RELATED: 529 ABLE accounts may offer even more benefits for people with disabilities

5. Review available features. Be sure to find a plan that suits your individual needs and, above all, makes it easy for you to save. That might mean having an automatic investment option, offering financial literacy programs or the convenience of a debit or purchasing card to withdraw funds.

6. Explore all of your options. There are currently 17 active ABLE plans, each offering unique benefits and investment options. Most of these plans are available nationwide, so, just like a 529 college savings plan, you can invest with almost any stateís ABLE plan, no matter where you live.

CURRENT AVAILABLE 529 ABLE PLANS

State Plan Name Residency Requirement State Tax Deduction Total Asset-Based Expense Ratio Debit or Purchasing Card?
Alaska Alaska ABLE Plan NO NO 0.34%-0.38% NO
Florida ABLE United YES NO 0.035%-0.29% NO
Illinois Illinois ABLE NO NO 0.34%-0.38% Spring 2017
Iowa IAble Plan NO $3,239 0.34%-0.38% NO
Kansas Kansas ABLE NO NO 0.34%-0.38% Spring 2017
Kentucky STABLE Kentucky YES NO 0.19%-0.60% YES
Michigan MiABLE NO $5,000/ $10,000 0.50%-0.78% YES
Minnesota Minnesota ABLE Plan NO NO 0.34%-0.38% Spring 2017
Nebraska Enable Savings Plan NO $10,000* 0.50%-0.56% YES
Nevada ABLE Nevada NO NO 0.34%-0.38% Spring 2017
North Carolina NC ABLE NO NO 0.34%-0.38% 03/31/2017
Ohio Stable Account NO $2,000 0.19%-0.60% YES
Oregon Oregon Able Savings Plan YES $2,310/$4,620** 0.30%-0.38% YES
Oregon ABLEforAll NO $2,310/$4,620** 0.30%-0.38% YES
Rhode Island RIís ABLE NO NO 0.34%-0.38% Spring 2017
Tennessee ABLE TN NO NO 0.35%-0.62% NO
Virginia ABLEnow NO $2,000 0.37%-0.40% YES

*$5,000 per married taxpayer filing separately
**Oregon income tax deduction only applies to accounts with beneficiaries under 21 years old.

Nearly one in five people in the U.S. are living with a disability, according to the CDC. 529 ABLE plans allow these individuals to save money in a tax-advantaged count in order to pay for education, assisted technology, transportation and other expenses that help them get and keep jobs, improve their health and participate in social activities.

With ABLE accounts, owners and beneficiaries have more choice and control when it comes to their investments than ever before. And ABLE accounts can also be a great supplement to other types of income and savings, including special needs trusts and government assistance like Social Security Income (SSI) and Medicaid.

Today, there are 17 different tax-advantaged ABLE plans available, each offering unique features and benefits designed to help individuals build substantial savings and achieve financial independence. Savingforcollege.com is in the process of creating detail pages for each ABLE plan, but in the meantime you can refer to the Table on page 2 for a quick summary of whatís available.

As you review your options, here are six things to consider before selecting a plan:

  1. Determine eligibility. To qualify for an ABLE account, individuals must meet the following requirements:
    • Diagnosed with a disability before age 26 and currently receiving SSI and/or SSDI
    • OR
    • Diagnosed with a disability before age 26 and meet Social Security requirements and be able to obtain a disability certification from a doctor
  2. Know how much you can invest. Contribution limits for ABLE plans are similar to limits for 529 college savings plans. For 2017, total annual contributions for an account are limited to $14,000, which is also the amount of the annual gift tax exclusion. Lifetime limits mirror the stateís limits for 529 savings plans, which range from $265,000 to $511,000. However, keep in mind that if youíre receiving SSI, your $2,000 cash benefit will be suspended once the account exceeds $100,000.
  3. Find out if your state offers tax benefits. ABLE accounts offer federal tax-free growth and wonít be taxed at withdrawal when the funds are used to pay for disability expenses. In addition to this, six states currently offer a state tax deduction for contributions made to an ABLE plan.
  4. Understand the planís fees and expenses. When shopping for an ABLE plan, itís important to know how much youíll be charged for things like account maintenance, rollovers and investment choices. The less you pay in fees, the more youíll be able to save. To see each planís total expense ratio, refer to the table on page 2.

RELATED: 529 ABLE accounts may offer even more benefits for people with disabilities

5. Review available features. Be sure to find a plan that suits your individual needs and, above all, makes it easy for you to save. That might mean having an automatic investment option, offering financial literacy programs or the convenience of a debit or purchasing card to withdraw funds.

6. Explore all of your options. There are currently 17 active ABLE plans, each offering unique benefits and investment options. Most of these plans are available nationwide, so, just like a 529 college savings plan, you can invest with almost any stateís ABLE plan, no matter where you live.

CURRENT AVAILABLE 529 ABLE PLANS

State Plan Name Residency Requirement State Tax Deduction Total Asset-Based Expense Ratio Debit or Purchasing Card?
Alaska Alaska ABLE Plan NO NO 0.34%-0.38% NO
Florida ABLE United YES NO 0.035%-0.29% NO
Illinois Illinois ABLE NO NO 0.34%-0.38% Spring 2017
Iowa IAble Plan NO $3,239 0.34%-0.38% NO
Kansas Kansas ABLE NO NO 0.34%-0.38% Spring 2017
Kentucky STABLE Kentucky YES NO 0.19%-0.60% YES
Michigan MiABLE NO $5,000/ $10,000 0.50%-0.78% YES
Minnesota Minnesota ABLE Plan NO NO 0.34%-0.38% Spring 2017
Nebraska Enable Savings Plan NO $10,000* 0.50%-0.56% YES
Nevada ABLE Nevada NO NO 0.34%-0.38% Spring 2017
North Carolina NC ABLE NO NO 0.34%-0.38% 03/31/2017
Ohio Stable Account NO $2,000 0.19%-0.60% YES
Oregon Oregon Able Savings Plan YES $2,310/$4,620** 0.30%-0.38% YES
Oregon ABLEforAll NO $2,310/$4,620** 0.30%-0.38% YES
Rhode Island RIís ABLE NO NO 0.34%-0.38% Spring 2017
Tennessee ABLE TN NO NO 0.35%-0.62% NO
Virginia ABLEnow NO $2,000 0.37%-0.40% YES

*$5,000 per married taxpayer filing separately
**Oregon income tax deduction only applies to accounts with beneficiaries under 21 years old.

 

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