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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
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 what’s available.
As you review your options, here are six things to consider before selecting a plan:
- 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
- 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 state’s limits for 529 savings plans, which range from $265,000 to $511,000. However, keep in mind that if you’re receiving SSI, your $2,000 cash benefit will be suspended once the account exceeds $100,000.
- Find out if your state offers tax benefits. ABLE accounts offer federal tax-free growth and won’t 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.
- Understand the plan’s fees and expenses. When shopping for an ABLE plan, it’s important to know how much you’ll be charged for things like account maintenance, rollovers and investment choices. The less you pay in fees, the more you’ll be able to save. To see each plan’s total expense ratio, refer to the table on page 2.
RELATED: 529 ABLE accounts may offer even more benefits for people with disabilities
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 what’s available.
As you review your options, here are six things to consider before selecting a plan:
- 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
- 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 state’s limits for 529 savings plans, which range from $265,000 to $511,000. However, keep in mind that if you’re receiving SSI, your $2,000 cash benefit will be suspended once the account exceeds $100,000.
- Find out if your state offers tax benefits. ABLE accounts offer federal tax-free growth and won’t 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.
- Understand the plan’s fees and expenses. When shopping for an ABLE plan, it’s important to know how much you’ll be charged for things like account maintenance, rollovers and investment choices. The less you pay in fees, the more you’ll be able to save. To see each plan’s 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 state’s 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 | RI’s 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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