Able Investment Account Basics and Benefits

An Able Investment Account is a type of account that allows you to save for a child's future expenses related to their disability.

You can use the funds in an Able Investment Account for a wide range of qualified disability expenses, including education, health, and transportation costs.

The annual contribution limit for an Able Investment Account is $15,000 per beneficiary.

Having an Able Investment Account can provide peace of mind and financial security for families with children with disabilities.

The funds in an Able Investment Account grow tax-free, which means you won't have to pay taxes on the investment earnings.

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To open an ABLE account, you'll need your personal information such as name, address, date of birth, and Social Security number.

You'll also need financial information like your bank account number and routing number for the initial deposit. Most ABLE accounts are opened online, making it a convenient process.

You can choose to designate an authorized legal representative to help manage your account and identify a beneficiary. This can be a helpful option if you need assistance with managing your account.

The type of ABLE account you choose will also depend on the features you select, such as using a debit card or pre-paid card.

When setting up your account, you'll have a range of options to choose from, depending on your state. Let's take a look at some of the investment options available.

Florida offers seven professionally managed options, including both predefined portfolios and individual funds from which customized portfolios can be structured. These options are designed to cater to different risk tolerance levels and investment goals.

Nebraska, on the other hand, has a more limited selection, with four investment options available. One of these options is an FDIC-insured bank savings option, which can provide a safe and stable return.

Ohio also offers a range of investment options, including an FDIC-insured option. This can provide an added layer of security for your investments.

Tennessee stands out for having the most choices, with 14 funds from which to choose. This can be overwhelming, but it also gives you more flexibility to tailor your investments to your needs.

Here's a breakdown of the number of investment options available in each state:

By understanding the options available in your state, you can make informed decisions about your investments and set up your account to meet your financial goals.

A trust can be a valuable tool in managing your finances, especially when combined with an ABLE account. You can have a special needs trust, pooled trust, or both, in addition to an ABLE account.

A trust can deposit funds into an ABLE account to cover shelter costs without reducing SSI payments. This is a significant advantage to having both a trust and an ABLE account.

You can also use a trust on its own, or in combination with an ABLE account.

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Account management varies across states, with some offering more convenient options than others. Florida allows electronic transfers to a bank account or issues paper checks to pay expenses, with free electronic transfers and up to two checks per month.

In Nebraska, you can set up prescheduled withdrawals to a bank account, and withdrawals from the checking account option can be made by check or debit card. Ohio also offers electronic transfers to a bank account, paper checks, or a STABLE debit card.

Some states, like Tennessee, still make all disbursements in the form of a paper check to the beneficiary.

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Account management varies by state, so it's essential to understand the rules in your area. Florida allows electronic transfers to a bank account or issues paper checks to pay expenses directly to third parties, with free electronic transfers and up to two checks per month.

In Florida, additional checks are $5.00 each, which can add up quickly. Nebraska also allows electronic transfers to a bank account or issues paper checks, and you can even arrange prescheduled withdrawals.

Ohio offers flexibility with withdrawals, allowing electronic transfer to a bank account, paper checks, or a STABLE debit card. Tennessee, on the other hand, currently makes all disbursements in the form of a paper check to the beneficiary.

Here's a quick rundown of the withdrawal options for each state:

It's crucial to stay informed about changes in your state's ABLE program, so be sure to check reputable resources like the ABLE National Resource Center or The Arc for the latest information.

Fees can vary significantly from state to state when it comes to managing your account. Florida, for instance, waives maintenance fees until July 1, 2017, after which there will be a $2.50 monthly fee if the beneficiary chooses electronic withdrawals.

Some states charge a flat rate for account maintenance. Nebraska, for example, charges $11.25 quarterly ($45 annually).

Ohio's fee structure is tiered, with residents paying $2.50/month ($30 annually) for account maintenance and asset-based fees of 0.19% to 0.34%, based on their investment choices. Out-of-state account holders pay more: $5/month ($60 annually) for maintenance and asset-based fees of 0.45% to 0.60%, depending on investments.

Tennessee is an outlier, as it doesn't charge for account maintenance, but has asset-based fees of 0% to 0.63%, depending on investments.

Here's a breakdown of the fees charged by these states:

Medicaid payback is a rule that affects ABLE account owners who used Medicaid services after opening their account. If the account owner passed away, Medicaid may claim reimbursement from the remaining funds in the ABLE account.

Qualified disability expenses, including funeral and burial expenses, are paid first from the ABLE account. This means that the remaining funds are only used for Medicaid reimbursement after these expenses are covered.

Medicaid Buy-In premiums are deducted before any payback from the ABLE account. This is a crucial aspect of the Medicaid payback rule.

Some states have laws that limit Medicaid payback for ABLE account owners who use their state's ABLE plan. This can affect the amount of reimbursement Medicaid can claim from the ABLE account.

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Contributions to an ABLE account can be made by anyone, and the total annual contributions from all sources cannot exceed $18,000, or the lesser of the beneficiary's compensation or the federal poverty line.

The funds in an ABLE account can be used for qualified disability expenses (QDEs), which are not limited to medically necessary items. QDEs can include basic living expenses, such as food, housing, and transportation.

You can roll over funds in a Nebraska 529 College Savings Plan account to an Enable Savings Plan account without adverse state tax consequences. However, rolling over assets from a Nebraska 529 College Savings Plan account to any other state's ABLE account will be subject to Nebraska state income tax.

Here are the state-specific differences in contribution limits and requirements:

Note that some states have specific requirements for contributions, such as a minimum amount or a specific method of payment.

Contributions to an ABLE account can be made by anyone, not just the account owner, but there are limits on how much can be contributed annually. The total annual contribution limit is $18,000 per calendar year.

You can roll over funds from a Nebraska 529 College Savings Plan account to an Enable Savings Plan account without facing adverse state tax consequences. However, rolling over assets from a Nebraska 529 College Savings Plan account to another state's ABLE account will be subject to Nebraska state income tax and recapture of the Nebraska tax deduction.

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Account balances up to $100,000 are disregarded for purposes of determining eligibility to receive resource-based federal benefits. However, if the total account balance exceeds $100,000, SSI will count that amount as a resource of the account owner, and SSI benefits will be suspended until the account balance falls below $100,000.

Some states have different rules for contributions and account balances. For example, in Florida, the maximum account balance is $418,000, while in Nebraska, contributions must be at least $50 to open an account, and subsequent contributions must be at least $25.

Here's a summary of the contribution limits for some states:

Funds in an ABLE account can be used for qualified disability expenses (QDEs), which are not limited to medically necessary items.

ABLE funds can be used for a wide range of expenses, including education, food, housing, transportation, and employment training and support.

The Social Security Administration considers food a QDE, which means that families can use ABLE funds to purchase groceries or cover meal expenses.

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Funds can also be used for personal support services, medical expenses, prevention and wellness expenses, financial management, administrative services, legal fees, and other expenses.

As a best practice, the authorized legal representative or account owner should always seek no-cost resources for QDEs first before using ABLE funds.

ABLE funds offer flexibility for families, allowing them to purchase items that benefit the individual with a disability, such as a vehicle for transportation or a home for living.

The specifics of how a home or vehicle is titled depend on state laws and regulations, so it's essential to consult with a legal expert familiar with ABLE accounts and property law.

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With an able investment account, you can start investing with as little as $100. The account is designed to be flexible, allowing you to invest in a variety of assets.

You can choose from a range of investment options, including stocks, bonds, and ETFs. This diversity helps you spread risk and potentially increase returns.

The account has no minimum balance requirement, making it accessible to those just starting out. There are no fees for opening or maintaining the account.

You can invest as frequently as you like, with no restrictions on the number of transactions per month. This flexibility allows you to take advantage of market fluctuations.

The account is designed to be low-maintenance, with automatic investment options available. You can set up regular transfers from your bank account to invest in your portfolio.

The account's investment options are designed to be tax-efficient, with tax-loss harvesting available to minimize your tax liability.

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To sign up for an ABLE account, you'll need to provide personal information, such as your name, address, date of birth, and Social Security number. You can complete the online application, and some states also offer a hard copy application for mail-in.

The Nebraska program provides a hard copy application for mail-in, which must be used by guardians, conservators, or agents designated through a power of attorney. They must supply evidence of their legal authority.

You can choose to designate an authorized legal representative to help manage your account and identify a beneficiary. You'll also have choices about the types of ABLE account and features you'll select, such as using a debit card or pre-paid card, as available in the plan you choose.

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To open an ABLE account, you'll need to meet certain eligibility requirements. Individuals with a disability that began before age 26 are eligible to open an ABLE account.

You can open an ABLE account at any age, and the account is always opened in the name of the person with the disability. An ABLE account may be opened by an individual with a disability, a parent, a guardian, or an agent designated through a power of attorney.

To qualify, you'll need to meet one of two requirements: receive Supplemental Security Income payments or Social Security Disability Insurance Benefits, or have a licensed physician sign a document stating you have "marked and severe" functional limitations. Enrollment requirements vary by state.

Typically, you'll need to certify that you have this documentation, but you won't be required to upload a copy. On January 1, 2026, the age of ABLE eligibility will be expanded to include people with a disability that began before age 46.

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To open an ABLE account, you'll need to provide personal information, such as your name, address, date of birth, and Social Security number. You'll also need financial information, like your bank account number and routing number, for the initial deposit.

Most ABLE accounts are opened online, but Nebraska's program also offers a hard copy application for mail-in, which is required for guardians, conservators, or agents designated through a power of attorney. This form must be accompanied by evidence of their legal authority.

You can choose to designate an authorized legal representative to help manage your account and identify a beneficiary. It's a good idea to consult a special needs attorney about establishing a power of attorney to avoid interruptions in signature authority during the term of the ABLE account.

To apply, you can use the online application process, which is available for all ABLE programs, or contact the Nebraska program for a hard copy application.

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