American Funds Able Account Overview and Investment Strategy

The American Funds Able Account is a great way to save for your child's future education expenses, with a unique investment strategy that sets it apart from other college savings plans.

It's designed to help you save for education expenses while potentially reducing your tax liability, which can be a huge relief for families.

The plan allows you to invest in a range of American Funds portfolios, each with its own investment strategy and risk level, giving you flexibility to choose what works best for your family.

One of the key benefits is that earnings grow tax-deferred, meaning you won't have to pay taxes on the gains until you withdraw the funds.

Class A, 529-A, and ABLE-A shares are the most cost-effective way to own American Funds, especially for investors with significant account balances. These shares come with an up-front sales charge that declines as the investment amount increases.

Lower annual expenses are also associated with these shares. If you qualify for a sales charge reduction, be sure to let your financial professional know at the time of purchase to receive it.

The sales charge for these shares can be reduced in various ways, but you'll need to take action to receive the discount.

For investors with significant account balances, Class A, 529-A, and ABLE-A shares are often the most cost-effective way to own our funds. These shares are sold with an up-front sales charge, which declines as the amount invested increases.

The sales charge on Class A, 529-A, and ABLE-A share purchases can be reduced if you qualify. You'll need to tell your financial professional or contact us at the time of purchase to receive the sales charge reduction.

Class A, 529-A, and ABLE-A shares also carry lower annual expenses compared to other share classes. This can help you save money in the long run.

There is no contribution deadline for ABLEAmerica accounts, but contributions do count as gifts in the year they are made. This means you must make a contribution by December 31 to count as a gift for that year.

Contributions to ABLEAmerica accounts can be made by check, phone, or automatic investment. If a bank account is on file, you can make one-time ACH purchases or set up automatic investments by phone.

Class C and 529-C shares are often called level-load shares and do not have an up-front sales charge.

They convert to Class A shares after 8 years, or Class 529-A shares after 5 years.

You can invest up to $500,000 in Class C shares, or into Class 529-C shares in a CollegeAmerica Account until the balance reaches $500,000.

If you sell Class C and 529-C shares before holding them for 12 months, you'll pay a 1% sales charge on the shares you sell.

In some situations, your redemption will not be assessed a contingent deferred sales charge, or CDSC.

The American Funds Tax-Exempt Preservation Portfolio excludes five specific funds, including the American Funds Inflation Linked Bond Fund and the Short-Term Tax-Exempt Bond Fund.

These excluded funds have sales charge information that can be found in a separate table, which shows funds with a maximum sales charge of 2.50%.

You should check the prospectuses of these funds for more detailed information about sales charges and other important details.

You can request one-time or automatic exchanges or rebalances by phone, but be aware that these are considered strategy changes.

The IRS limits ABLEAmerica accounts to two strategy changes per calendar year.

If you make more than two strategy changes in the same calendar year, they are treated as distributions and reported on Form 1099-QA.

Examples of strategy changes include one-time exchanges or multiple exchanges performed on the same calendar date, one-time rebalances, adding an automatic exchange or rebalance plan to an existing funded account, and updating or removing an automatic exchange or rebalance plan after it has drafted at least once.

Here are some key strategy change examples:

Contact your financial professional if you're unsure whether a transaction will constitute a strategy change.

PA ABLE accounts have an annual maintenance fee of $56, which is deducted quarterly, or $31 if you opt for electronic delivery of quarterly statements and account activity confirmations.

You can save $25 per year by choosing electronic delivery over traditional mail. This may be a small difference, but it can add up over time.

The annual maintenance fee for PA ABLE accounts is $56, or $31 with electronic delivery, and is deducted quarterly in four equal payments of $14 or $7.75.

If you're not interested in electronic delivery, you'll pay the full $56 annual maintenance fee. But if you do opt in, you'll save that $25 per year.

For investors with significant account balances, Class A, 529-A, and ABLE-A shares can be a cost-effective option. These shares have an up-front sales charge that declines as the amount invested increases.

To qualify for a sales charge reduction, you'll need to tell your financial professional or contact the company at the time of purchase.

The PA ABLE Savings Program offers several Asset-Allocation Options with varying blends of stocks, bonds, and cash – with the combinations ranging from conservative to aggressive.

These options provide flexibility in managing your investments, allowing you to choose a mix that suits your risk tolerance and financial goals.

The Investment Option has a number of investment-related risks, which you can review in the Plan Disclosure Statement for a detailed list and description.

You can select from a range of investment options that cater to different risk appetites, making it easier to create a portfolio that aligns with your comfort level.

The American Funds ABLE account has a unique fee structure that's worth understanding. There's an annual maintenance fee of $56, which is deducted quarterly in four installments of $14 each.

If you opt for electronic delivery of your quarterly statements and account activity confirmations, you can save some money. The annual account maintenance fee is reduced to $31, which breaks down to $7.75 per quarter.

To open an American Funds ABLE account, you'll need to explore the benefits you'll receive.

You can use funds in an ABLE account for qualified disability expenses, including basic living expenses, housing, and healthcare.

Families and individuals with disabilities can benefit from having an ABLE account, making it easier to manage their finances and plan for the future.

To be eligible for an ABLE account, you must be a U.S. citizen or permanent resident.

You must meet at least one of the following criteria: be entitled to benefits based on blindness or disability under Title II or XVI of the Social Security Act.

Alternatively, you can have a signed licensed physician's diagnosis that you are either blind, have a medically determinable physical or mental impairment, or have a condition listed in the "List of Compassionate Allowances Conditions" maintained by the Social Security Administration.

The applicable blindness or disability must have occurred before age 26.

Here are the specific requirements:

Families and individuals with disabilities can use funds in an ABLE account for qualified disability expenses including basic living expenses, housing and health care.

People with disabilities and their families can breathe a sigh of relief knowing they have a financial safety net to cover essential costs.

ABLE accounts can be used for basic living expenses, which can include things like groceries, transportation, and personal care items.

This financial support can help reduce stress and anxiety for individuals with disabilities and their loved ones.

Housing costs, such as rent or mortgage payments, can also be covered with funds from an ABLE account.

Health care expenses, including medical bills and prescriptions, are another qualified use of ABLE account funds.

With a PA ABLE account, you'll have the freedom to spend your money on the things that bring you joy and fulfillment. You can use the funds in your account to pay for qualified disability expenses, such as education, employment training, and health and wellness expenses.

You can also use your PA ABLE account to save for the future, such as paying for retirement or long-term care expenses. This can give you peace of mind knowing that you have a safety net in place.

Explore the benefits you'll receive with a PA ABLE account, including tax-free growth and withdrawals for qualified expenses.