ABLE accounts

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
dave_5
Posts: 57
Joined: Sun Jan 06, 2019 10:45 am

ABLE accounts

Post by dave_5 »

I am a person with a disability and recently found out about ABLE accounts. I did some research on this and the Virginia plan looked decent, but would like to know your input if you've had experience with some of the other states, I also looked at the one from Tennessee. I'm a working professional, but am looking to legally shield more of my money from taxation. I've also considered HSA's in the past, but due to the ongoing medical expenses related to my disability makes them less than favorable.

The way I understand the ABLE account is that it operates kind of like a Roth IRA, it's after tax. What I didn't like about it, supposedly upon the death of the owner, it goes to probate. Any experience with this kind of stuff? I'm mostly not concerned about possible public benefit eligibility at present time since I work. Supposedly, they came about in 2014, but this is my first time hearing about them.
User avatar
beyou
Posts: 6915
Joined: Sat Feb 27, 2010 2:57 pm
Location: If you can make it there

Re: ABLE accounts

Post by beyou »

The disability must have started by age 26.

If not on SSI, you will need some doctors note attesting to your disability.

You can contribute 15k/year.

There is a list of qualified expenses you may use to spend this on. Or you can invest.

Fees are there for various services, but I found the VA NOW had better fees and good investment choices compared to my own state.

ABLE NOW in VA does seem to be an excellent option.
JBTX
Posts: 11227
Joined: Wed Jul 26, 2017 12:46 pm

Re: ABLE accounts

Post by JBTX »

dave_5 wrote: Tue Jun 15, 2021 10:37 pm I am a person with a disability and recently found out about ABLE accounts. I did some research on this and the Virginia plan looked decent, but would like to know your input if you've had experience with some of the other states, I also looked at the one from Tennessee. I'm a working professional, but am looking to legally shield more of my money from taxation. I've also considered HSA's in the past, but due to the ongoing medical expenses related to my disability makes them less than favorable.

The way I understand the ABLE account is that it operates kind of like a Roth IRA, it's after tax. What I didn't like about it, supposedly upon the death of the owner, it goes to probate. Any experience with this kind of stuff? I'm mostly not concerned about possible public benefit eligibility at present time since I work. Supposedly, they came about in 2014, but this is my first time hearing about them.
I think the Tennessee plan is now only open to TN residents. They changed it.

An ABLE accounts works mostly like a 529. Earnings are tax free. If used correctly they can allow you to get govt benefits and the assets don't disqualify you from benefits.

If the beneficiary dies, the govt can try to recover amounts expended on Medicaid.
idunno246
Posts: 22
Joined: Fri Nov 19, 2010 5:59 pm

Re: ABLE accounts

Post by idunno246 »

ive been looking into them for my disabled sister. the main benefit we're seeing for us is its shielded from the $2000 of savings medicaid cap, so most of what we're thinking about may not apply when not on medicaid. There's state tax benefits to look at as well - if she was in PA, i was in PA, and had a PA able account that i contribute to, PA will credit some state taxes back to me(maybe if you use the one in your state? but its all state by state). and my understanding the concern with probate is any money in it goes to medicaid after death - is probate an issue when not using medicaid? the recommendation we're hearing is limit it to just money you expect to spend short term, and less about investing
terran
Posts: 3046
Joined: Sat Jan 10, 2015 9:50 pm

Re: ABLE accounts

Post by terran »

The main advantage is that the first $100k isn't counted towards SSI or medicaid asset limits, but if you have enough work history to qualify for SSDI and medicare if that becomes necessary then the ABLE account might not be of much value, especially if you have other assets. Some states offer a tax deduction and investments aren't taxed, so it could be good in that respect. Your state can take it when you die to pay for anything they pay out for medicaid during your lifetime.
beyou wrote: Tue Jun 15, 2021 10:58 pm You can contribute 15k/year.
For someone who works there might be a higher limit if they don't contribute to a workplace retirement plan: https://www.irs.gov/government-entities ... sabilities
beyou wrote: Tue Jun 15, 2021 10:58 pm Fees are there for various services, but I found the VA NOW had better fees and good investment choices compared to my own state.

ABLE NOW in VA does seem to be an excellent option.
Have you actually opened the VA account? At first it seemed like it was only a $39 fee + underlying fund fees (pretty low with Vanguard life strategy funds), but then I saw some indications that there might be additional AUM management fees.
User avatar
beyou
Posts: 6915
Joined: Sat Feb 27, 2010 2:57 pm
Location: If you can make it there

Re: ABLE accounts

Post by beyou »

terran wrote: Wed Jun 16, 2021 2:18 am The main advantage is that the first $100k isn't counted towards SSI or medicaid asset limits, but if you have enough work history to qualify for SSDI and medicare if that becomes necessary then the ABLE account might not be of much value, especially if you have other assets. Some states offer a tax deduction and investments aren't taxed, so it could be good in that respect. Your state can take it when you die to pay for anything they pay out for medicaid during your lifetime.
beyou wrote: Tue Jun 15, 2021 10:58 pm You can contribute 15k/year.
For someone who works there might be a higher limit if they don't contribute to a workplace retirement plan: https://www.irs.gov/government-entities ... sabilities
beyou wrote: Tue Jun 15, 2021 10:58 pm Fees are there for various services, but I found the VA NOW had better fees and good investment choices compared to my own state.

ABLE NOW in VA does seem to be an excellent option.
Have you actually opened the VA account? At first it seemed like it was only a $39 fee + underlying fund fees (pretty low with Vanguard life strategy funds), but then I saw some indications that there might be additional AUM management fees.
OP said “ I'm mostly not concerned about possible public benefit eligibility at present time since I work.” which I took to mean they are NOT on SSI and therefore the 100k asset limit is not relevant to them. You can go over 100k in an ABLE account but one would lose SSI (not an issue for OP).

Regarding the fees, they are all on the ABLE-NOW website and yes there are asset fees. And banking/acct service fees. I said VA was better than my state, never said it was free. If you compare, VA / NOW is lower than NY. You can get banking fees waived with 10k balance (not in NY plan). Asset fees are lower in VA than NY. Note these are run by same state agencies as 529 plans and many 529 plans add their own asset fees above what one would pay if going direct to same fund without 529 plan. Same for HSA, many HSA providers charge asset fees to move $ to funds, and often monthly service fees (that may be paid by your employer but by you when no longer employed at same company). There is no getting away from fees in 529, HSA nor ABLE without shopping around. I will admit I only looked at VA and NY, not an extensive search. Casual googling NY and VA are easily found, there have to be other options, maybe some have lower fees still. Also there are no state tax deductions in NY for NY residents, but there are in VA for VA residents. Does not help me but I can’t figure out why NY thinks they will get deposits when there are cheaper options out there (in terms of fees).
Topic Author
dave_5
Posts: 57
Joined: Sun Jan 06, 2019 10:45 am

Re: ABLE accounts

Post by dave_5 »

terran wrote: Wed Jun 16, 2021 2:18 am The main advantage is that the first $100k isn't counted towards SSI or medicaid asset limits, but if you have enough work history to qualify for SSDI and medicare if that becomes necessary then the ABLE account might not be of much value, especially if you have other assets. Some states offer a tax deduction and investments aren't taxed, so it could be good in that respect. Your state can take it when you die to pay for anything they pay out for medicaid during your lifetime.
beyou wrote: Tue Jun 15, 2021 10:58 pm You can contribute 15k/year.
For someone who works there might be a higher limit if they don't contribute to a workplace retirement plan: https://www.irs.gov/government-entities ... sabilities
beyou wrote: Tue Jun 15, 2021 10:58 pm Fees are there for various services, but I found the VA NOW had better fees and good investment choices compared to my own state.

ABLE NOW in VA does seem to be an excellent option.
Have you actually opened the VA account? At first it seemed like it was only a $39 fee + underlying fund fees (pretty low with Vanguard life strategy funds), but then I saw some indications that there might be additional AUM management fees.
I haven't opened in the VA plan. I was really interested in the TN plan, but you have to be a TN resident. My main thing is all the fees. I'm with Vanguard at the moment for investing and as we know they're good about keeping expenses low. VA looked "okay," do you know if ABLE accounts can be used as supplemental retirement accounts like a Roth IRA? What I liked about the ABLE account is that it beats my flex spending account at work and I can actually direct part of my paycheck into the able account. The interest bearing part of the account is with PNC, which pay close to no interest, (I'm currently getting 0.45% with my online money market account with PenFed, so I have the boxes checked there).

Hopefully, I won't need public benefits, but what I've learned during my lifetime is good health can never been taken for granted and a lot happens in life. In the ABLE account you can change investment choices up to two (2) times a year. I have to kind of reveal my hand here, I hate taxes, so if I can provide for myself and my living expenses in a tax advantaged way all the better, but I'm a saver and would plan to use my ABLE account for asset accumulation. I found out an added bonus, that the ABLE account would be protected from creditors in most cases during a bankruptcy, like a 401k, but didn't like it would wind up going through probate unlike a lot of other retirement and bank accounts.
Topic Author
dave_5
Posts: 57
Joined: Sun Jan 06, 2019 10:45 am

Re: ABLE accounts

Post by dave_5 »

idunno246 wrote: Tue Jun 15, 2021 11:11 pm ive been looking into them for my disabled sister. the main benefit we're seeing for us is its shielded from the $2000 of savings medicaid cap, so most of what we're thinking about may not apply when not on medicaid. There's state tax benefits to look at as well - if she was in PA, i was in PA, and had a PA able account that i contribute to, PA will credit some state taxes back to me(maybe if you use the one in your state? but its all state by state). and my understanding the concern with probate is any money in it goes to medicaid after death - is probate an issue when not using medicaid? the recommendation we're hearing is limit it to just money you expect to spend short term, and less about investing
Be honest I don't know much about ABLE. Seems like a great idea, but part of me likes an HSA better. The thing about being disabled is I have ongoing expenses that tie into my disability, that wouldn't be there if I wasn't disabled. For the VA plan you can get up to a 2k tax credit towards your state income taxes, which pays off the plan's admin fees plus more. I was thinking about starting my own side business in addition to my job, so I was also exploring starting a solo 401k with Vanguard, lots more flexibility. What do you think?
runninginvestor
Posts: 1796
Joined: Tue Sep 08, 2020 8:00 pm

Re: ABLE accounts

Post by runninginvestor »

dave_5 wrote: Wed Jun 16, 2021 8:48 am
idunno246 wrote: Tue Jun 15, 2021 11:11 pm ive been looking into them for my disabled sister. the main benefit we're seeing for us is its shielded from the $2000 of savings medicaid cap, so most of what we're thinking about may not apply when not on medicaid. There's state tax benefits to look at as well - if she was in PA, i was in PA, and had a PA able account that i contribute to, PA will credit some state taxes back to me(maybe if you use the one in your state? but its all state by state). and my understanding the concern with probate is any money in it goes to medicaid after death - is probate an issue when not using medicaid? the recommendation we're hearing is limit it to just money you expect to spend short term, and less about investing
Be honest I don't know much about ABLE. Seems like a great idea, but part of me likes an HSA better. The thing about being disabled is I have ongoing expenses that tie into my disability, that wouldn't be there if I wasn't disabled. For the VA plan you can get up to a 2k tax credit towards your state income taxes, which pays off the plan's admin fees plus more. I was thinking about starting my own side business in addition to my job, so I was also exploring starting a solo 401k with Vanguard, lots more flexibility. What do you think?
I've gone back and forth with this account as well (I'm in a different state). From what I've read, the distribution/qualified expenses categories seem to be much more flexible than HSA's. The downside, is if you aren't receiving SSDI/SSI there is an ongoing documentation requirement for your provider to fill out. Having a disability myself, added appointments and paperwork is just an additional complication in my life.

If you were looking for a side business and solo 401k, I would think filling your retirement accounts first would be more beneficial. I always gathered ABLE accounts to be more beneficial for asset protection and allowing people on SSI/Medicaid to have actual savings without penalizing them, which is why there's the probate aspect so those programs get a chance to reimburse themselves. If you have a will though, and none of those programs, probate wouldn't be a top concern from my pov.

If you get a tax deduction at the state level though, and you have the funds, I'd say it's a valuable tool.
Topic Author
dave_5
Posts: 57
Joined: Sun Jan 06, 2019 10:45 am

Re: ABLE accounts

Post by dave_5 »

JBTX wrote: Tue Jun 15, 2021 11:06 pm
dave_5 wrote: Tue Jun 15, 2021 10:37 pm I am a person with a disability and recently found out about ABLE accounts. I did some research on this and the Virginia plan looked decent, but would like to know your input if you've had experience with some of the other states, I also looked at the one from Tennessee. I'm a working professional, but am looking to legally shield more of my money from taxation. I've also considered HSA's in the past, but due to the ongoing medical expenses related to my disability makes them less than favorable.

The way I understand the ABLE account is that it operates kind of like a Roth IRA, it's after tax. What I didn't like about it, supposedly upon the death of the owner, it goes to probate. Any experience with this kind of stuff? I'm mostly not concerned about possible public benefit eligibility at present time since I work. Supposedly, they came about in 2014, but this is my first time hearing about them.
I think the Tennessee plan is now only open to TN residents. They changed it.

An ABLE accounts works mostly like a 529. Earnings are tax free. If used correctly they can allow you to get govt benefits and the assets don't disqualify you from benefits.

If the beneficiary dies, the govt can try to recover amounts expended on Medicaid.
Yeah, unfortunately. The TN one seems like one of the best ones around. I also looked at the NE one, seemed pretty good. A lot of states don't have ABLE accounts, I also liked they're portable, so if you move to another state, you can move the money around to meet your individual needs.
User avatar
Portfolio7
Posts: 1128
Joined: Tue Aug 02, 2016 3:53 am

Re: ABLE accounts

Post by Portfolio7 »

My oldest has one that we set up, in Colorado. We do transfers from his savings account to keep him eligible for SSI. He has about $7,500 in the Able account. So far, none of it is actually invested, though I think we'll start soon. There are 6 diversified portfolio investment options ranging from 90/10 AA to 10/30/60 or thereabouts. He's not really cognizant of money, so even though we told him what we are doing, I am confident he has no idea that it's there.
"An investment in knowledge pays the best interest" - Benjamin Franklin
Topic Author
dave_5
Posts: 57
Joined: Sun Jan 06, 2019 10:45 am

Re: ABLE accounts

Post by dave_5 »

Portfolio7 wrote: Thu Jun 17, 2021 2:14 pm My oldest has one that we set up, in Colorado. We do transfers from his savings account to keep him eligible for SSI. He has about $7,500 in the Able account. So far, none of it is actually invested, though I think we'll start soon. There are 6 diversified portfolio investment options ranging from 90/10 AA to 10/30/60 or thereabouts. He's not really cognizant of money, so even though we told him what we are doing, I am confident he has no idea that it's there.
How do you like it? I'm here in Virginia, but had thought about doing the Montana plan. TN has the best one in my opinion. I listen to a radio show where the guys are from TN and have a special needs child and considered ABLE "life changing." Unfortunately, TN doesn't allow participants from other states. I'm thinking about maybe VA may be best for me because it lets me have a state income tax deduction. The thing I don't like is you can't actually pick the funds, what they offer are "funds or funds," which I think Bogle wouldn't have liked, this drives expenses up unnecessarily. From what I read, people think these accounts will get cheaper once more people enroll in them.
User avatar
typical.investor
Posts: 5263
Joined: Mon Jun 11, 2018 3:17 am

Re: ABLE accounts

Post by typical.investor »

dave_5 wrote: Sat Jun 19, 2021 9:50 pm I'm thinking about maybe VA may be best for me because it lets me have a state income tax deduction. The thing I don't like is you can't actually pick the funds, what they offer are "funds or funds," which I think Bogle wouldn't have liked, this drives expenses up unnecessarily. From what I read, people think these accounts will get cheaper once more people enroll in them.
I agree the state tax deduction would be beneficial.
A Virginia individual income tax deduction of up to $2,000 per Account on contributions, with unlimited carryovers to the extent of the contributions.
If I am reading that correctly, you can carry over your contributions and claim a tax deduction in future years if you exceed $2,000. Nice!

As for fees, of the 0.36% to 0.39% overall charge, only 0.11% to 0.14% is for the underlying funds. So while maybe a collection of individual funds would be slightly cheaper, I have a difficult time imagining Bogle not approving of those funds. Compared to many choices in 401k or other tax deferred plans, they are good. It's really the administrative costs of the plans that isn't so attractive, but then again the tax deduction makes it work in your favor and there are going to be somewhat similar administrative costs everywhere.

My son's account is at Able Unified which generally runs 0.265% to 0.290% (except for FDIC savings and money market which are cheaper). They do offer allocation to your desired amount of US stocks, International stocks and US bonds, but they are not any cheaper than the preset Conservative, Moderate, or Growth portfolios.

If you are expecting to be spending out of it, then perhaps the VanguardLifeStrategy Income Fund might be good. It's 80% fixed income but you could then hold a higher proportion of stocks in your other (IRA, ROTH, taxable) accounts to meet your overall AA. Also, the use of hedged foreign bonds might help if rates rise as foreign bonds won't suffer a NAV loss if US rates rise and vice versa. But maybe Moderate Growth would be fine for you too. Kind of a big jump there, 20% stocks or 60% stocks. Maybe 60% is better since you are working and contributing and even if you have to sell in a March 2020 type crash, you wouldn't be facing sequence of return risk that much.


Choices are:

Vanguard® LifeStrategy Growth Fund (the “Growth Fund”). The Growth Fund invests in other Vanguard Mutual Funds according to a fixed formula that reflects an allocation of approximately 80% of the Growth Fund’s assets to common stocks and 20% to bonds.

The benchmark components of the composite index for the Growth Fund are the CRSP US Total Market Index, the FTSE Global All Cap ex US Index, the Barclays U.S. Aggregate Float Adjusted Index, and the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged).

Vanguard LifeStrategy Moderate Growth Fund (the “Moderate Growth Fund”). The Moderate Growth Fund invests in other Vanguard Mutual Funds according to a fixed formula that reflects an allocation of approximately 60% of the Moderate Growth Fund’s assets to common stocks and 40% to bonds.

The benchmark components of the composite index for the Moderate Growth Fund are the CRSP US Total Market Index, the Barclays U.S. Aggregate Float Adjusted Index, the FTSE Global All Cap ex US Index, and the Barclays Global Aggregateex-USD Float Adjusted RIC Capped Index (USD Hedged).

VanguardLifeStrategy Income Fund (the “Income Fund”). The Income Fund invests in other Vanguard Mutual Funds according to a fixed formula that reflects an allocation of approximately 80% of the Income Fund’s assets to bonds, and 20% to common stocks.

The benchmark components of the composite index for the Income Fund are the Barclays U.S. Aggregate Float Adjusted Index, the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (US

Fidelity® Investments Money Market Government Portfolio (“Money Market Fund”).
User avatar
Wiggums
Posts: 7050
Joined: Thu Jan 31, 2019 7:02 am

Re: ABLE accounts

Post by Wiggums »

No experience with ABLE accounts, but this website may be helpful

https://www.ablenrc.org/compare-states/
"I started with nothing and I still have most of it left."
Topic Author
dave_5
Posts: 57
Joined: Sun Jan 06, 2019 10:45 am

Re: ABLE accounts

Post by dave_5 »

Check out this post, from the Virginia ABLE site:

https://www.able-now.com/resources/blog ... -recovery/
Davis123
Posts: 4
Joined: Tue Mar 02, 2021 5:21 am

Re: ABLE accounts

Post by Davis123 »

What state is Able Unified from? I googled the name, but not finding it listed. I am trying to find a plan with lower fees.

Ref : "My son's account is at Able Unified which generally runs 0.265% to 0.290% (except for FDIC savings and money market which are cheaper). They do offer allocation to your desired amount of US stocks, International stocks and US bonds, but they are not any cheaper than the preset Conservative, Moderate, or Growth portfolios."
User avatar
typical.investor
Posts: 5263
Joined: Mon Jun 11, 2018 3:17 am

Re: ABLE accounts

Post by typical.investor »

Davis123 wrote: Thu Jul 15, 2021 10:51 am What state is Able Unified from? I googled the name, but not finding it listed. I am trying to find a plan with lower fees.

Ref : "My son's account is at Able Unified which generally runs 0.265% to 0.290% (except for FDIC savings and money market which are cheaper). They do offer allocation to your desired amount of US stocks, International stocks and US bonds, but they are not any cheaper than the preset Conservative, Moderate, or Growth portfolios."
Florida. Can’t recall if they accept out of State residents.
hockeypuck
Posts: 9
Joined: Sat Jul 24, 2021 3:30 pm

Re: ABLE accounts

Post by hockeypuck »

I have had an account in the VA ABLEnow program for about four years now. My disability was diagnosed around age five (onset has to be before your 26th birthday). There is no actual verification of disability when you open the account but they do advise you to have a physician's note available on demand if requested. I still have not been asked to verify my disability four years later.

Bank fees are $3.25 a month unless you carry a $10k cash/money market balance in which case the fees are waived. I live in VA so I get the $2000 deduction on my VA state taxes each year for contributions. There's also this burried in the website:
Investment Administrative Fee - Annual charge of 0.15% of investment balances assessed quarterly.

Program Administrative Fee - Annual charge of 0.10% of investment balances assessed quarterly.

Asset Management Fees - Each Investment Portfolio manager charges an Asset Management Fee. Please see the ABLEnow Program Description and Custodial Account Agreement for more information.
They offer funds from the Vanguard LifeStrategy family and mine is in the LifeStrategy Growth fund. I wish they would offer a fund without international exposure, but you could do worse than this fund. I use the ABLE account as another avenue for retirement savings as I stash $15k a year in the ABLE account. It is very much like a Roth, where gains are NON taxable. Right now, I max out my 401k, Roth IRA and then my ABLE account. Once my ABLE account reaches $100k, I may cool down the contributions -- we'll see.

What you can spend it on is also pretty loose. Basically anything disability related --
Qualified disability expenses (QDE) are expenses made for the benefit of the designated beneficiary and related to his or her disability, including, but not limited to:
Education;
Housing;
Transportation;
Employment training and support;
Assistive technology and related services;
Health;
Prevention and wellness;
Financial management and administrative services;
Legal fees;
Expenses for ABLE account oversight and monitoring;
Funeral and burial; and,
Basic living expenses.
https://www.ssa.gov/ssi/spotlights/spot-able.html
So you can use it for mortgage, rent, food, clothing, transportation (car payments, gas, maintenance), communication (internet, cable, computers, tablets, cell phone and service), personal care, housekeeping, a chef, etc. The only stuff that seems off limits are leisure and travel expenses -- maybe! Again, there really is no audit/oversight of what you spend your ABLE funds on. They tell you to save your receipts in case the IRS does decide to run an audit. I've stayed within the guidelines and NEVER have been asked to produce receipts nor explain expenses.

When I first signed up, I did worry about possible Medicaid expenses in the future if my disability progresses to the point where I need full-time live-in care. Full time care can be expensive and NOT covered by Medicare nor private insurance (I do have a LTC insurance policy though). Nevertheless, ABLE accounts are never considered as a resource for Medicaid eligibility in Virginia and there is no Medicaid clawback/recovery in Virginia anymore either. I hope I never get to this point, but it helps to have this in my back pocket just in case.

When you sign up, you get a free ABLEnow debit card to access your funds but you can also have funds sent to you via check or direct deposited to your personal bank account.
IPost
Posts: 1
Joined: Mon Aug 16, 2021 7:40 am

Re: ABLE accounts

Post by IPost »

Just joined Bogleheads, content looks great! Hope my detailed factual post helps!

I opened an ABLE Virginia account. It's a shame because these accounts generally speaking were created to allow all people with disabilities (with disability onset less than 26 years old) to save, invest and if applicable, shelter money so account owners don't lose gov housing and other needs based benefits.

The ABLE Virginia program seems to benefit the latter group and forgotten about people with disabilities like me who somehow manage(d) to be gainfully employed. Since I have enough SSA work quarters to qualify for SSDI, I'm not concerned with protection of benefits.

My hope was that ABLE would allow me to effectively invest for the mid and longer term when my impairment-related expenses are likely to increase substantially. The ABLE Virginia program isn't designed for and seems to penalize people who find themselves in this situation. I wasn't allowed to put all of my initial deposit into just Vanguard LifeStrategy funds (which are a mix of equity and bonds). I had to put 40% (YMMV) into the cash account. With cash and bonds paying little, this doesn't help me meet my goal. Wish this program was designed more equitably and with no restrictions. People who want their $ in equity/bonds shouldn't have to subsidize those who have their funds in the cash account. The ABLE cash holders are the ones who are driving up program fees with generally speaking their frequent transactions and need for telephone customer support. Not sure if other states are like this.

I question the value of an ABLE account for those who aren't concerned with protecting gov benefits. The tax benefit, if any, should be analyzed. And the account grows tax-free. But if the funds are setting in conservative accounts and tapped sooner rather than later, this isn't much of a benefit at least these days. The value of telephone customer support is questionable as well. In my case, customer service gave incorrect information twice and three times. nobody could explain beneficiary/probate well enough for me. In my situation, it may be best to put in enough to get the tax benefit and dump any remaining $ into something like the Vanguard Total Stock Market fund where the fees are very low. I'll leave that analysis for someone else here.

The probate aspect also makes me pause before contributing more to ABLE. The account holder is the beneficiary. If one has their ABLE account in their Will, does this avoid probate?

I cannot comment much on the other ABLE programs. They seem to be similar in terms of expenses but vary with investment choices. If someone has the time to review all 50 states and finds some with lower fees and restrictions, I'd appreciate hearing from your here.
User avatar
LadyGeek
Site Admin
Posts: 95686
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: ABLE accounts

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general discussion).

IPost, Welcome!
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
arcticpineapplecorp.
Posts: 15080
Joined: Tue Mar 06, 2012 8:22 pm

Re: ABLE accounts

Post by arcticpineapplecorp. »

IPost wrote: Mon Aug 16, 2021 11:04 am The probate aspect also makes me pause before contributing more to ABLE. The account holder is the beneficiary. If one has their ABLE account in their Will, does this avoid probate?
found this:
Although an ABLE account owner may not have a will, they can name a beneficiary for ABLE funds that remain after their death. ABLE funds can be used to pay for outstanding qualified disability expenses along with burial and funeral expenses. Some states have decided not to implement Medicaid pay back for their residents. These states to date are: California, Kansas, Illinois, Maryland, Pennsylvania, and Oregon.
https://www.ablenrc.org/wp-content/uplo ... _Final.pdf
also for the earlier post regarding in home care:
Does an ABLE account have any effect on the Medicaid Waiver?
All ABLE savings do not impact Medicaid eligibility, including Medicaid Waiver plans
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
User avatar
typical.investor
Posts: 5263
Joined: Mon Jun 11, 2018 3:17 am

Re: ABLE accounts

Post by typical.investor »

IPost wrote: Mon Aug 16, 2021 11:04 am Just joined Bogleheads, content looks great! Hope my detailed factual post helps!

I opened an ABLE Virginia account. It's a shame because these accounts generally speaking were created to allow all people with disabilities (with disability onset less than 26 years old) to save, invest and if applicable, shelter money so account owners don't lose gov housing and other needs based benefits.

The ABLE Virginia program seems to benefit the latter group and forgotten about people with disabilities like me who somehow manage(d) to be gainfully employed. Since I have enough SSA work quarters to qualify for SSDI, I'm not concerned with protection of benefits.

My hope was that ABLE would allow me to effectively invest for the mid and longer term when my impairment-related expenses are likely to increase substantially. The ABLE Virginia program isn't designed for and seems to penalize people who find themselves in this situation. I wasn't allowed to put all of my initial deposit into just Vanguard LifeStrategy funds (which are a mix of equity and bonds). I had to put 40% (YMMV) into the cash account. With cash and bonds paying little, this doesn't help me meet my goal. Wish this program was designed more equitably and with no restrictions. People who want their $ in equity/bonds shouldn't have to subsidize those who have their funds in the cash account. The ABLE cash holders are the ones who are driving up program fees with generally speaking their frequent transactions and need for telephone customer support. Not sure if other states are like this.

I question the value of an ABLE account for those who aren't concerned with protecting gov benefits. The tax benefit, if any, should be analyzed. And the account grows tax-free. But if the funds are setting in conservative accounts and tapped sooner rather than later, this isn't much of a benefit at least these days. The value of telephone customer support is questionable as well. In my case, customer service gave incorrect information twice and three times. nobody could explain beneficiary/probate well enough for me. In my situation, it may be best to put in enough to get the tax benefit and dump any remaining $ into something like the Vanguard Total Stock Market fund where the fees are very low. I'll leave that analysis for someone else here.

The probate aspect also makes me pause before contributing more to ABLE. The account holder is the beneficiary. If one has their ABLE account in their Will, does this avoid probate?

I cannot comment much on the other ABLE programs. They seem to be similar in terms of expenses but vary with investment choices. If someone has the time to review all 50 states and finds some with lower fees and restrictions, I'd appreciate hearing from your here.

The cash requirement is the first $2000. After that you can invest. In a way, it’s kind of requiring people to have an emergency fund which isn’t a terrible thing since both stocks and bonds can have bad periods.

What is your allocation? Did you choose the aggressive plan? I didn’t look at the details, but typically that is 80% stocks.
mortal
Posts: 497
Joined: Mon Sep 15, 2008 11:15 pm

Re: ABLE accounts

Post by mortal »

I'm putting away 15k / yr into an able account, and another 15k / yr into my states 529, which can be rolled into the able account when I retire. There is a chance that the 529 -> able roll over goes away when the legislation allowing it expires, but I look at it from an 'expected value' point of view. I put the chances of it not getting renewed at ~ 20%. My state allows tax deductions on 529 (but not able :annoyed) contributions. This effectively gives me 30k / yr in 'roth like' space, so I'm taking full advantage of it. It may well be that the 'juice is not worth the squeeze' for this. Only time will tell.
Post Reply