[00:00:00] Hello. Once again, my name is Adam Partwell. I am the Director of Attainable Outreach for the Massachusetts Educational Financing Authority, and welcome to our presentation on ABLE accounts and the Massachusetts version of ABLE accounts that we call the Attainable Savings Plan. Uh, MEFA is a state authority that was created by the Commonwealth of Massachusetts in 1982 to help families plan, save, and pay for college and reach their various financial goals.

The Stephen Beck Jr. Achieving a Better Life Experience, or ABLE Act, amended the federal tax code in 2014 to add Section 529A and created what we colloquially call ABLE accounts. These are tax-exempt or tax-advantaged investment accounts for eligible individuals with disabilities to be used for qualified disability expenses while keeping eligibility for federal public benefits.

There have been additional provisions and expansions to the program over the course of the year since its adoption, and we are going to ensure that we have the most up-to-date [00:01:00] information for all of you in the course of this presentation There are 49 active ABLE programs in the United States of America.

In Massachusetts, the ABLE program is called the Attainable Savings Plan. So if someone says they have an ABLE account or an Attainable Account, or an ABLE account in Massachusetts, those are all the same thing. Um, you are able to open an ABLE account in any state in the country that you prefer. We have a great number of people who have opened Massachusetts-based programs from other states.

Uh, and there are some folk who choose to go other where because of various choices for their individual families. Attainable was launched along with most ABLE programs in 2017. MEFA is the state sponsor, and Fidelity Investments is our program manager. What that means is my role is to provide information and support and be able to explain how ABLE accounts can be used and how they can be best utilized, and Fidelity is essentially the individ- uh, the organization that’s holding the accounts.

They will be your bank for the purpose of this account. So if you have challenges [00:02:00] with, you know, uh, withdrawals or deposits or whatever, then you would want to talk to Fidelity, but you can reach out to me or, and MEFA if you were wondering about how, uh, the systems actually work, uh, more macroscopically.

Now, who is eligible for an Attainable Account? You are eligible if the onset of disability occurred before the individual turned 46 years old. That is as of January 1st of this year is when that change took place. It used to be 26. So again, that is onset. It is not how old you currently are. It is not how old you were when you were diagnosed.

So if you were, you know, uh, diagnosed at 75 and you’re currently 82, but your diagnosis says you’ve had this since you were born, you could open an ABLE account. So again, it’s when did the onset of the disability occur? If you are eligible to receive SSI or SSDI due to your disability, you’re automatically qualified to receive, uh, to be able to open an ABLE account.

The div- disability should be [00:03:00] considered marked and severe, which is a Social Security Administration term that indicates that an impairment causes serious significant limitations in a person’s ability to perform, uh, perform basic work or age-appropriate activities. And that me- uh, mentality about age-appropriate activities, uh, you know, functional independence, uh, and also your ability to be an employed individual can often, uh, inform a lot of whether or not you could consider yourself a person who could qualify for an ABLE account.

So when you’re coming to, if you do not have SSI or SSDI, those are what you wanna have in mind when you’re thinking about do you self-certify as meeting requirements like those in the Social Security Administration’s Blue Book. Uh, there are several categories that are listed at right, which are conditions that would qualify, uh, or within the Social Security Administration’s compassion allowances.

So things like long-term cancer recovery, uh, mental disorders that again impair your ability to do, uh, work or age-appropriate activities, uh, digestive system, cardiovascular system, respiratory system. Pretty much there are, uh, anything that [00:04:00] affects your day-to-day life. Additionally, uh, if an individual is blind, they, um, you know, there are specifics about, uh, visual acuity of 20 over 200 or less, you would also qualify for an ABLE account

Funds in an attainable account are not counted against federal benefits like SSI, HUD, SNAP, BA- uh, FAFSA, and VA pension. Uh, we’ll go into a lot more detail about that a little later. Attainable accounts also allow the account owner or beneficiary to save above the current $2,000 SSI asset limit. Family and friends can contribute to an attainable account.

Beneficiaries have relatively immediate access to funds for their needs. I put a relatively in there because, uh, as an investment account, uh, when you take money out of these accounts, you’re essentially asking the bank to make a small scale investment trade and then give you the result. So it can take about 24 hours for the money to clear, but you don’t have to wait a month, and you don’t have to go through an attorney.

You just need to request the funds and give it a, like I said, around 24 hours [00:05:00] for that to clear. These pr- accounts provide individuals with financial independence, several tax benefits that we’ll go over, and also the ability to save for needs and emergencies without penalty So what are the qualified disability expenses that are included that you can use your ABLE account for?

These are broad categories. They are intentionally broad, because the idea and the thought process when they were written was that there are so many different experiences for individuals that, uh, nobody’s gonna be the same. The health concerns for one person is gonna be different than health concerns for another.

But the general categories are health, personal support services, which not as on– is not just, like, community supports, but also financial management, legal fees, or ABLE oversight or account monitoring, all transportation expenses. So that can be a bus pass, but that can also be buying a car. Um, that could also be repairing the wheelchair r- uh, lift on your, on your van, which averages about $1,200 a y- uh, uh, uh, [00:06:00] a year to make sure that the wheelchair ramp lifts, uh, work.

Uh, employment training and supports. Uh, funeral and burial expenses. Assistive technology and related services, which include applications, aug- augmentative communication apps. So if you already have an iPad, but you needed to save s- $600 or whatever it is to buy a augmentative communication app to go on that iPad, you could also purchase that out of funds from your ABLE account.

Housing expenses, which we have an entire slide on coming up just on all the things that are involved in housing. All your education expenses, all your prevention and wellness expenses, and your basic living expenses. And one of the things that was clarified a couple years ago is that all food is considered a basic living expense.

It is considered a qualified disability expense. So whether it’s grocery, a fast food restaurant, uh, you know, takeout, whatever, if it’s food, it could be fu- you could be funding that out of, uh, funds taken out of your ABLE account. The whole idea of these are the– of these accounts is they are to help maintain or improve health, [00:07:00] independence, and quality of life

When it comes to housing expenses, a lot of these are in line with what are called in-kind support and maintenance if you are receiving SSI and you are living at home. Uh, mortgage and house down payments are funds, are things you can pay for out of your ABLE account, including any property insurance required by the mortgage holder.

Uh, rent payments, including first, last, and security. Uh, so if you ne- I wanna move for better opportunities, you can use, save up in your ABLE account for that opportunity. Real property taxes, that’s property on, like, the buildings and the land, things that don’t move when you move. All your bills, heat, fuel, gas, electricity, water, sewer, phone, internet, you can pay for those out of ABLE.

Garbage removal, you can pay for it out of ABLE. Essentially anything that is considered a need, you can pay for generally out of your ABLE account. Uh, ABLE accounts are allowed to be opened by a, uh, selected group of individuals. Uh, and that group is the [00:08:00] individual with the disability themselves, the person with their power of attorney, their legal guardian, their spouse, their parent, sibling, grandparent, or representative payee.

Uh, the person who opens the account and has control over deposits and withdrawals is called the person with signature authority, or the PSA. This list that I have here is a hierarchy, so you need to, uh, by s- by creating the account, you’re saying nobody higher you, than you on the list wanted that responsibility.

The individual with the disability is always considered the beneficiary and owner of the account, regardless of who the PSA is. However, the individual with the disability can also be the PSA. These are very unique accounts in that they can, th- those two ideas can be separate or the same person. Um-

When it comes to establishing your relationship with an individual as far as opening these, these accounts, if you have a legal [00:09:00] based relationship to the individual as opposed to a familial one, you will need to provide certain documentation. So, uh, the individual with disability, of course, doesn’t have to provide anything for themselves.

A person with a power of attorney will need to have a durable power of attorney paperwork that needs to be submitted to Fidelity. If you have a conservator or legal guardian, they’re going to need to have a copy of the court document that appoints them as conservator or guardians, and it needs to be certified and preve- and presented to Fidelity.

I will say that we have noticed that there have been several, uh, challenges with the guardianship paperwork in that oftentimes there are boxes that have been left blank on the paperwork. Uh, most frequently, when does this expire, with the idea being that because it doesn’t expire, they should just leave that blank, and Fidelity cannot accept it if it has blank boxes on it.

So if your, uh, guardianship paperwork says, you know, when does this expire and it has a blank box there, you’re going to need to go back to the court and have it recertified with, you know, something put into that box like [00:10:00] does not expire. Um, if you have a family relationship, you know, spouse, parent, sibling, or grandparent, fraud protections protect the individual against, you know, someone saying that you’re a family member that isn’t.

So they do not need to provide extra paperwork beyond that. If you are a rep payee, you need to have a copy of the Social Security Administration documentation giving you rep payee status. Um, and if you are an entity that also is the rep payee, then you also need to provide that, uh, paperwork as well.

Uh, one of the interesting things about these accounts is that their contribution limits have increased very regularly since they’ve been created. Uh, I will remind you that for the first couple years w- after these were signed into tax law, they weren’t actually active. Uh, they became active really in 2017.

So you can see that for most of the last several years, they’ve gone up almost every year. So current contribution limits per year is $20,000 in [00:11:00] 2026. That will probably go up again in 2027. We’ll see. Um, additionally, that is, that is the amount that, uh, you’re allowed to contribute if the individual, the beneficiary, is not employed.

Due to the ABLE to Work Act, which was made permanent this past summer, there is an additional amount of money that can be contributed, um, on top of that 20,000 per year, and it is the lesser of that individual with the disability’s gross income or currently $15,650. So if an individual is at work and they’re making, you know, $20,000 a year at their job, they can put an additional 15,650 on top of the 20,000, so a total of $35,650 could go into an ABLE account that year.

Um, if they are making less than that amount, so if they’re only making $5,000 at their job per year, it would be the 5,000 on top of the 20 for a total of 25,000 per year. Up to [00:12:00] $100,000 in savings in an ABLE account is disregarded as a resource and will not affect supplemental security income or SSI.

Uh, SSI is the only benefit that is affected at, uh, the $100,000 mark, and that is true for all ABLE accounts across the country. The account balance cannot be contributed to, cannot be added to by the individual or families, whatever, uh, you know, or anyone in their life if it exceeds $500,000 here in Massachusetts.

However, because it is an investment account, it is permitted to continue to grow on its own at that point. You just can no longer be putting your own money into it after it hits $500,000. Um, although of the, uh, any, any of that amount of money, uh, does not affect the individual’s Social Security and disability insurance, um, their housing assistance, you know, from HUD, their SNAP.

That includes HUD-VASH, by the way, which is the veterans assistance, uh, part of HUD. Uh, FAFSA, Medicare Parts A, B, C, or D, Medicare Savings, Extra Help, and Medicaid. [00:13:00] All federal programs that are not affected in any way by any amount in an ABLE account Here in Massachusetts, there is no annual account maintenance fee.

Uh, there are, however, a, because they are investment accounts, an investment fee based on the investment portfolio that you select when you set up the account. Uh, we, uh, actually adjusted these this past year, so they have gone down. So the fees now range from 0.085% to 0.75% of assets, which tends to be significantly less than the return on those investments Um, I do like to talk a little bit about how, like real world, these things can affect people’s lives.

Before the ABLE Act, individuals, again, since 1989 was the last time that we adjusted the asset limit for Social Security. Uh, so they’re only allowed to have $2,000 in assets, which are reviewed monthly for all expenses, which means savings are actively discouraged and unexpected income and routine savings can [00:14:00] exceed the limit.

We saw this a lot with, uh, people getting back payments for COVID support. Uh, we also sometimes see it with someone doing really well at work and getting a bonus or a Christmas bonus, or getting a gift from a parent or grandparent. And this often necessitates what is, uh, called a spend down, where people have to get rid of money very quickly to keep it under 2,000 to preserve the benefits, because those benefits are necessary for a person’s life.

They need to have access to their doctor, to their housing, and, you know, so many of them to, to their, you know, per- perhaps it’s the only way they can afford groceries. And so keeping their assets under 2,000 is, um, very much a necessity. So this means that also they, they can’t save for a surgery. They can’t save to move to a better neighborhood.

They can’t save to have a car that’s reliable. Uh, so we have enforced poverty in a lot of ways that, um, we haven’t been able to adjust again since 1989 is the last time th- that asset limit was changed. And in fact, there’s an exclusion amount that we’re allowed to have before we count to 2,000, and that hasn’t changed since [00:15:00] 1972.

So with an ABLE account, you’re allowed to, uh, provide individuals with the opportunity to save for those larger expenses, especially ones that are really necessary to their life and well-being without fear. And it also provides a place where, oh, I have unexpected income, somebody’s trying to help me out, or what have you, I also can move funds there so that I don’t have to immediately get rid of money very quickly.

We see this in particularly if someone is living in a residential placement where the funds can not only, uh, once again, you can’t buy anything that can hold value because it’ll turn into an asset, and you also, uh, can’t buy anything that benefits the household because it needs to be spent on you personally.

So you can’t buy something for the living room. Uh, so this is where we see a lot of people buying bedroom sets every year, or really nice jeans, or really nice curtains, even if they don’t need them, just to try and get rid of money, instead of being able to save it for something that they really want. Uh, attainable allows individuals to save, and that’s one of the reasons that I’m a very passionate advocate for [00:16:00] it.

Additionally, one of the great ways that we can move to better parts of our, our, you know, chances in life is having a good education. And attainable accounts can be used for all education expenses, not just tuition, but also textbooks, assistive technology, one-on-one assistance, trade school, and all things involved with trade school, including your tools Um, support or, you know, culinary certificates, anything that can maybe help somebody be able to move forward as far as their goals and their aspirations.

Uh, we’ve seen what we often refer to as a cliff effect when it comes to high school to college, uh, switchovers, where because high school has got so much built-in supports for an individual, whereas when you get to a college environment, you need to go to disability services, request your supports, be able to explain them to someone, be able to take what you’ve been given from disability supports over to a professor, watch the professor.

If the professor’s not doing what they’re supposed to be doing, be able to explain that back to disability s- It be– there’s a lot of barriers when it comes to advocacy in this environment, and being able to save up money [00:17:00] for, uh, essentially building a bridge over that cliff can be a, a nor- enormous, uh, gift to individuals, where it’s things like, I just need a recorder.

I just need a, a note-taker. I need to be able to pay for an advocate. These are all things, again, that you could utilize your ABLE account funds to pay for. So it can provide those opportunities for education equity. There are a lot of different things that people don’t even really think about as far as all the things, the, the most broad qualified disability expense categories that we can utilize ABLE for.

Once again, if you’re in employment, you can think about your coaching, your uniforms, your certifications, your tools, moving closer to, to your job so that, you know, are a new opportunity for you. Health insurance, medical health services, uh, vision, dental, uh, durable medical equipment. I need a new wheelchair.

I need to fix my electric wheelchair. I need to, uh, get a new walker. I need something, uh, once again, I need orthotics, therapy, personal assistance, uh, communication devices, braille keyboards, [00:18:00] screen readers, uh, emergency response systems, im- uh, educational software and memory aids. There’s so many different things that we can be really thinking creatively about how we can be utilizing the fact that someone is finally being allowed to save to improve their lives Uh, one of the big questions I get when I’m, uh, talking at tables at transition resource fairs and what have you about ABLE is, okay, I, I made an ABLE account, I’m not sure how to take the money out of the account.

Uh, it- when you want to spend out of your ABLE account, you need to transfer it to essentially, uh, another bank account that’s acting as a middleman. You can’t spend money directly out of the investment account. So you can transfer it to any bank you’d like. You can transfer it to a checking account, a savings account, wherever you’d like.

Uh, once funds leave the account, if you then try to put them back into the account, they do still count towards the contribution limit for that year. So try to take out what you believe you’re actually going to utilize. Uh, there are rules. Once again, this is… I didn’t make them, so don’t get [00:19:00] mad at me, uh, that funds withdrawn for housing must be used within the same calendar month that they are withdrawn.

So don’t pull money out on the, uh, 30th to pay your rent on the 1st. You know, take it out on the 25th and pay it a couple days early, and, you know, I guarantee no landlord’s gonna be upset with getting their rent a couple days early. Uh, because withdrawals from an attainable account are an investment trade, I mentioned this earlier, but I’ll revisit, uh, time should be allowed for the funds to be deposited, and that’s generally about 24 hours.

Uh, an option that can be helpful, but we have zero pressure to do this, but I’ve just found it to be very helpful for some families and individuals, is that you can open up a Fidelity cash management account at the same time as you open your attainable account. So essentially you’re gonna open a bank account with Fidelity at the same time as you open an investment account with Fidelity.

These are two separate things. Cash management account is not part of ABLE, but it is a part of Fidelity, which means that you still can have to transfer funds, but you can do it in Fidelity’s app, and [00:20:00] it’s drag and drop and makes it really easy. And also, if you have sort of a dedicated account for your ABLE spe- uh, uh, spending, you have really clear record keeping on what you spent and how it was for q- a qualified disability expense.

Uh, these cash management accounts from Fidelity do come with a Visa logo debit card, uh, that, so that can be used at any retailers or any ATM without any fees. Uh, you can also set up that Visa debit card to be how, uh, that person pays their share of their bills, which can ensure that, you know, you again have clear lines of the person paying their share of their bills, or also can show, you know, once again that, uh, those qualified disability expenses are coming out of that account.

Uh, I have received questions about, uh, families that were trying to save for their, you know, generally for children or grandchildren in savings bonds, and I’m wondering if they can roll directly into an ABLE account. Unfortunately, they cannot. You are going to have to cash out a bond, and then you can deposit that cash into an ABLE account under the same contribution limits Uh, opening an ABLE account is fairly [00:21:00] simple.

Uh, this, the first step is my favorite step that you can also skip if you don’t want to do it, which is to go to mefa.org/attainable just to get more information, because we write lots of articles, we provide lots of information about attainable in general that we try to make sure is available to you.

But if you feel like you’re fully ready to open an ABLE account right away, you can go to fidelity.com/able. Uh, that’s actually gonna be a re- a redirecting site. It’s gonna be fidelity.com/attainable/overview.html or something, but that’ll get you there. Um, there are some things that I highly recommend individuals do before clicking on that button that says, “Open an account.”

First one, download and review the Fidelity Attainable Savings Account disclosure document. That document has all the information about ABLE in detail. It is the legal version of this presentation, so they’ve got a page written on everything that I say a sentence about. Um, you also are going to find that in the course of opening an account, uh, you’re going to need to select your investment portfolio.

Uh, so don’t worry, we will show you [00:22:00] those in just a moment. Um, but, uh, there are 10 portfolio options, and oftentimes if someone is just jumped right in, they get to that and they get stuck because they’re not comfortable making that choice without preparation. Fortunately, all the information on all the portfolios is available on that main site, fidelity.com/able.

You can click on each of the portfolios. You can see how they’ve been performing. You can see what they’ve been invested in. You can really see how they operate. If you are a representative payee, the Social Security Administration requires that you must title the ABLE account to show that the payee has a fiduciary interest in the funds and the beneficiary owns the funds but has no access to them.

That’s a direct quote. I’m sure you can tell. The Social Security Administration recommends that the account ti- be titled in one of the following ways: beneficiary’s name by rep payee’s name, representative payee, and payee’s name, representative payee for beneficiary’s name. Finally, and this is perhaps the most important thing I can tell you about this particular website is [00:23:00] on fidelity.com/able, there is a phone number.

It is this phone number that is in the bottom right corner here, 844-458-2253, TTY 800-544-0118. Fidelity is a very large brokerage firm, and if you Google them and then call the number that comes up, you’re going to have to travel through a vast maze of phone trees to try and find someone who understands what attainable is.

That phone number goes straight to the attainable train- trained team at, uh, Fidelity. So if you have questions about your account or after you’ve opened the account, if you’re, you know, if you’re, uh, having any problems with it, or if you would like someone to help walk you through the opening of the account, all of those things can be done through that phone number.

So it’s a very, uh, helpful number to have at your disposal These are our portfolios. Um, their attainable savings are invested in professionally managed portfolios that match the beneficiary’s savings goals and risk tolerance. And naturally, the more invested in the [00:24:00] stock market you are, the greater risk possibility.

As in, there is a chance that you will be able to have a much higher return and also a chance that you will lose a greater amount of the funds for, for a given amount of time. Uh, most of the time, uh, the stock market tends to go up and down, but up and down in an upward trajectory. So, you know, uh, for long-term savings, there’s a lot more options as far as, uh, safety.

Uh, units of portfolios are municipal fund securities are subject to market fluctuation and volatility. Gain or loss may occur when units are sold. In other words, it’s the stock market, there’s gonna be ups and downs as, as the funds exist. Um, you can see that they range from 0% in the stock market all the way up to 100% in the stock market.

Excuse me. Uh, beneficiaries are allowed to change their portfolios twice per calendar year. And specific- uh, and more importantly for a lot of folk, you don’t have to put all your monies into one of these baskets. You can divide among these portfolios. So like, I would like half my funds [00:25:00] in the money market portfolio, I want 30%, uh, in the 40% portfolio, and I want the last 20%, I’m gonna give, you know, gamble with that a little bit.

I’m gonna put it at the 60 or 70% portfolio. So you can divide those up depending on how you feel about what’s going on in the world and what have you. And again, you are allowed to change all of that twice per calendar year

Attainable accounts are eligible for direct deposit, including SSI or SSDI benefit funds. Uh, direct deposit of a paycheck has to stay under the initial $20,000. If someone wants to contribute the additional $15,650 allowed by ABLE to work, it has to be deposited manually. So you have to cash your paycheck and then put that part in.

So if you divided your paycheck, uh, you know, I put half into ABLE and I put half into my checking account, um, you know, once again, after you get to 20,000, you can no longer direct deposit into ABLE, uh, from your, from your work income. Uh, direct depositing into an attainable savings account is just like any other account.

It requires a routing number and account [00:26:00] number. I will say that because it is an investment account, depending on the forms that are utilized by whatever company that individual works for, um, sometimes there’s not enough boxes. So you might have to have a conversation with HR. They can absolutely do it, but, you know, you might have to have do an extra step as far as getting it set up.

Direct deposit of your work income can be split between an attainable account and any other bank account, just like you could. I believe Department of Labor allows you to split, uh, up to five places before, uh, your workplace can tell you they don’t wanna do any more than that. Um, however, as we all are probably aware, SSI and SSDI are only allowed to go into their designated account.

They can only go one place. Uh, you can certainly pre-authorize an institution to transfer funds to ABLE. You could also be, put all of your money into ABLE if you wished. Uh, just be aware that, you know, as we all know, SSI and SSDI do have their own spending rules, and ABLE has the QDE spending rules. So those funds are gonna be subject to both those sets of rules.

Uh, [00:27:00] for a lot of individuals, that’s fine because most of what they’re going to be used works for everything. But I just like to make sure that I’m honest and upfront about these things, uh, before we continue. Uh, you can also set up automatic contributions into an ABLE account. You, again, do not have to, but it is something that is in the system should you wish to do so.

Some of the things that have been pre-established are $15 per month or $45 per quarter. But you can open an account with $0. You can open an account with $1. You can open an account with $100. You can put all $20,000 in on day one and then leave it alone for the year. But, uh, you know, you, that is up to you, but you do not need to have a bunch of money to open an ABLE account.

You, again, you can open it with no money in it at all with the intent to put a dollar per week in or whatever it is that you’d like to do in, as far as savings and in planning for perhaps future spend downs.

Um, SSI payees are responsible for keeping records on how they spent or conserved benefits. That [00:28:00] has always been true for rep payees, uh, and also individuals who’d receive the funds for themselves. But be sure you keep accurate records of the contributions and subsequent use of your funds provided by your benefits, specifically and including if you are saving any money in an ABLE account.

So if you move SSI funds into an ABLE account, you still need to be tracking that there is that amount of money left over from SSI being conserved somewhere. So if I have $200 from, uh, Social Security in my ABLE account, and I have $1,000 from, you know, my job in my ABLE account, there’s still $200 in my ABLE account from Social Security, and when I spend it, I need to tell Social Security that I spent it and what I spent it on.

So you wanna make sure that you’re keeping really clean records on where your Social Security things are going, including if they’re being saved in ABLE. Um, so that’s, you know, it’s again, if you’re mixing your benefits, you need to make sure you’re keeping a really strong re- uh, record keeping system. Um, as a general, uh, [00:29:00] note, I would advise if you are receiving a s- uh, Social Security, that you tell your caseworker that you’ve opened an ABLE account, because they’re going to be doing all the math based on the spending that you send them, and if there’s less there, they’re gonna say, “Oh, so you’ve kept $200 towards your asset limit,” because they don’t know that it was moved to an ABLE account.

And then when you tell them that, they’re gonna have to do all the math over again, and now you have a caseworker upset with you. So I highly recommend you, uh, you let them know when you’ve opened an ABLE account. It’s not required, but I think it’ll help you out. Um, the Social Security Administration says, suggest, uh, suggests that you should keep your records for at least two years.

Uh, when I was working in residential and employment and day habilitation, uh, every time we had any kind of audit, they always went by, back at least three years, so I always recommend that you do that with your f- with your funds as well Um, there are only a couple opportuni- uh, uh, option, uh, options. There are only a couple times when, [00:30:00] uh, withdrawals from an ABLE account will be subject to a tax penalty.

Uh, if you use your funds from a, uh, from an ABLE account for a non-qualified disability expense, you buy all your friends Xboxes or something, uh, the account owner could be subject to income taxes and a 10% penalty on the earnings from the investment. Um, what that’s referring to in part is the fact that any growth from investment on your, uh, ABLE account, so once again, if I put $100 per month th- uh, into an ABLE account for 20 years, that’s gonna be $24,000 if I stuck it under a mattress.

But if I was putting that same $100 continually growing in a 6% return, uh, investment account, at that s- after that same 20 years, there would be 46,000 and a coup- yeah, a couple hundred dollars beyond that. So essentially there’s an extra $18,000 that would be possible from saving in an investment account with a 6% return, and that [00:31:00] $18,000 has no income tax if it comes from an ABLE account, as long as it’s used for a qualified disability expense.

Uh, there are two circumstances in which a non-qualified distribution is not subject to the 10% federal, uh, penalty tax, and that’s if it’s made after the death of the individual or if they, you’re paying back the, uh, the government for retur- for excess contributions Uh, there are, on the other hand, some very nice, uh, benefits tax, uh, as far as taxes when it comes to ABLE accounts.

Uh, due to the ABLE Financial Planning Act, provided the beneficiary is the same, uh, on both accounts, or one beneficiary is a family member of the other, it is allowable to roll funds from a 529 college savings plan into an ABLE account without incurring any taxes or penalties. That, uh, was due to expire at the beginning of this year, but it has now been made permanent, so that was something that you’ll be able to do from now on, hopefully till the end of time.

Uh, it is still subject to the [00:32:00] contribution limit, however, so you can only roll over $20,000 per year at a time. Um, and that’s meaning that you won’t be able to put any other funds in there as well. But it does give you an option of, oh, we have way too much over here, we’d like to put it over here, uh, for, for, uh, a different type of use.

Additionally, uh, ABLE account owners who meet certain criteria can receive a saver’s credit on their federal taxes for their contributions into an ABLE account. Individuals are eligible if they are 18 or older, not a full-time student, and not claimed as a dependent on another person’s tax return. That credit is either 10%, 20%, or 50% of your contributions of the first $2,000 put into the account in that year, and the which of those you get, the 10, 20, or 30, is based on the individual’s a- adjusted gross income.

Uh, that will be going up to 2,100 in 2027. That’s already been signed into law. Additionally, and I mentioned this earlier, as long as withdrawals are spent on qualified [00:33:00] disability expenses, any attainable account growth is federal income tax free. Um, this is my morbid screen, and I apologize for that in advance.

Nobody likes to think about people dying. But, uh, after death, well, this is what happens with an ABLE account. The beneficiary or person with signature authority can assi- assign a successor beneficiary. In this case, beneficiary, uh, when it comes to, uh, ABLE accounts specifically refers to individuals with disabilities who qualify for aid.

Uh, so in event of their death, who will receive the account balance in their own attainable account after all account actions have been completed. And that last sentence is very… a couple words there is very important, and I’ll explain in just a moment why. Uh, additionally, the beneficiary or PSA can assign someone to receive the funds as part of that individual’s estate in the event of their death, who will receive the account balance after all account actions have been completed.

The funds will need, of course, to be removed from ABLE because that individual w- if they don’t, are not qualified for an ABLE account, cannot have an ABLE account. [00:34:00] Um- Uh, after the death of the beneficiary, the account is restricted for 12 months, during which the account is subject to Medicaid recapture from any state wherein the beneficiary has lived.

And that sentence is the most intimidating, uh, I’ve found for families when they talk about ABLE accounts, and I want to clarify some things about it that I think might lessen that blow. First off, you may have noticed in all these things it says after all account actions have been completed, because during that 12 months when the account is restricted, you are still able to pay any outstanding qualified disability expenses for that individual, which means we need to pay their rent for that month during which they passed, we needed to pay, uh, their hospital bills, we need to pay for their hospice care, we need to pay for their burial, we need to pay for their funeral.

All those are qualified disability expenses. So you … And for most of the individuals I’ve served, that will probably use up everything in the account, uh, just on its own. Additionally, uh, [00:35:00] the 12-month, uh, restriction is not something that is true for the entire country. This is one of the things that’s on a state-by-state basis.

Massachusetts picked the smallest window that was allowable, uh, for p- uh, tho- th- that, uh, Medicaid recapture to take place. So we give them the least amount of time possible for them to put in, uh, that claim. Um, there are several states that are now saying that they have illegalized, uh, Medicaid recapture.

They are, uh, it feel a little bit misleading in that what they have illegalized is Medicaid recapture by their state. So, um, you know, like Florida has ha- did this, and they’re saying, and what they’re saying is Florida will not do Medicaid recapture. However, the federal government is still allowed to do medication, uh, Medicaid recapture for that state be, uh, regardless of, of that law being passed, and that’s true for all the states that have, uh, passed that legislation.

We do have great hope that at some point this, uh, provision will be removed. [00:36:00] It is on the legislative agenda in general, but, uh, at, at, for the time ber- uh, being, Medicaid recapture remains in place. Um, MEFA has, uh, teamed up with, uh, Gift of College for the Gift of Independence gift cards. Uh, these are gift cards available at your CVS, Stop & Shop, Cumberland Farms, and what have you, that allow you to put money directly into an attainable account.

This can be really helpful if you have a family member who wants to help out an individual with, like, their grocery bill, but if they give them $500, that person has now received $500 in countable income, and that can then hurt their, uh, benefits for the next month. However, if I give you a card for funds that can only be directly transferred into a protected account, it bypasses that problem.

Uh, these are available again at a lot of major retailers, but additionally because it’s from giftofcollege.com, you can go to their website and also get one online so that you can send one of those gift cards from anywhere in the country[00:37:00]

Uh, there are a lot of, uh, ABLE resources available across the internet, mefa.org/attainable of course is the one that we do ourselves. The ABLE National Resource Center, as this is a federal program, there are national resources available. They do some fantastic work over there. Fidelity, of course, keeps lots of really good information about the program that we have here in Massachusetts.

The Social Security Administration has their own spotlight on ABLE accounts in order to make sure that people understand them in their fullness, because the Social Security Administration also doesn’t want to chase people around for spend down, so they’re actually very pro-ABLE accounts being around.

Uh, we also do have an email sign up that we encourage people to, uh, to sign up for, because we send out any major updates that we hear about the ABLE account so that everyone can know about them as, as soon as we can. We’re also all over social media and, uh, you know, we welcome you to come see us. We’ve been on…

We’ve done several of our, uh, uh, podcasts talking about ABLE. We just actually did one this past w- uh, [00:38:00] week that just came out, uh, on, on some, uh, disability employment, and we welcome you to join us there as well. Uh, if you have questions after this webinar, please reach out at 800-449-MEFA, that’s 6332, or at [email protected].

I personally maintain that inbox, and I would love to see your questions if I don’t have a chance to answer them today. With all that being said, we’re going to stop the recording, and I will answer your questions. I thank you all for your time, and we will go from there All right. Um, so sorry, I’m gonna Stop the recording