ABLE account: For SSI backpay and choosing an ABLE

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startabatha
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ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

My adult disabled child just got approved for SSI. There will be a lump sum of back pay. I would like to open an ABLE account to deposit the back pay. Has anyone done this? Is there a complication doing this if I, the parent am the representative payee?

Now to choose an ABLE account. We live in a state with no income taxes. I am interested in choosing a plan with the lowest overall fees. Has anyone done a recent comparison of ABLE accounts to see the ones with the lowest fees and best investment options?

Thank you!
Last edited by startabatha on Wed Nov 08, 2023 9:49 pm, edited 3 times in total.
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Michael Patrick
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by Michael Patrick »

You can compare state plans here: https://www.ablenrc.org/compare-states/
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

That site does not seem to compare the management fees. I did some further digging though. Here is the Virginia ABLEnow acount fee structure. How does this compare to the better plans out there?

https://www.ablenow.com/uploads/documen ... hedule.pdf
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by terran »

Last I looked it seemed like Virginia's plan was probably best.
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eye.surgeon
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by eye.surgeon »

I opened one for my (at the time) minor son who is disabled. He's 20 now. I have power of attorney and legal conservatorship of him and had no issues opening an account on his behalf. If I recall I had to upload the legal document stating my power of attorney to the account website.

I reviewed the different states as far as fees and funds offered and chose Oregon. I live in California. Things may have changed since then, this was about 2 years ago. Not sure I would choose the same again, the most aggressive fund they offer is 80/20, wish they had a 100% equities option for these young kids as I don't plan on him tapping it for a few decades. The website is great. I have a 529 in Utah which I love, but at the time Utah had not organized their ABLE account program yet. Not sure if it's up and running now.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by beyou »

For those using this to shelter assets for SSI purposes, not sure I understand the investment aspect. I read you can keep 100k in ABLE and after that point one can lose financial eligibility. Why put funds in the stock market and risk that ? If one can’t afford to contribute much, seems risky to use equities. If one can afford to contribute plenty for their child, then you risk breaching 100k threshold.

My son applied for SSI and was rejected so far, so not an immediate concern for me, but upon appeal if successful we’ll have same issue to park back pay somewhere. I would consider ABLE (though he’s turning 26 soon which may make that difficult, unless he can be deemed eligible based on his condition prior to 26).

Virginia plan did seem an excellent choice.
My state has their own plan (only for state residents) but VA seemed a bit better.
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

terran wrote: Sun Jan 16, 2022 6:03 pm Last I looked it seemed like Virginia's plan was probably best.
Yes, so far it seems the best for people that don’t need the state tax benefit or aren’t TN residents. TN has the best plan, but alas closed their plan to out of state residents.
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

eye.surgeon wrote: Sun Jan 16, 2022 6:06 pm I opened one for my (at the time) minor son who is disabled. He's 20 now. I have power of attorney and legal conservatorship of him and had no issues opening an account on his behalf. If I recall I had to upload the legal document stating my power of attorney to the account website.

I reviewed the different states as far as fees and funds offered and chose Oregon. I live in California. Things may have changed since then, this was about 2 years ago. Not sure I would choose the same again, the most aggressive fund they offer is 80/20, wish they had a 100% equities option for these young kids as I don't plan on him tapping it for a few decades. The website is great. I have a 529 in Utah which I love, but at the time Utah had not organized their ABLE account program yet. Not sure if it's up and running now.
Do you know how ABLE accounts would receive the SSI back pay if the recipient is the representative payee? My son is an adult now.

So far, I like the AbleNow out of VA best for lowest fees. I need to look closer at their investment options.

Once the SSI back pay is moved into the ABLE, it doesn’t have to be spent, right?
Last edited by startabatha on Sun Jan 16, 2022 7:36 pm, edited 1 time in total.
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

beyou wrote: Sun Jan 16, 2022 7:10 pm For those using this to shelter assets for SSI purposes, not sure I understand the investment aspect. I read you can keep 100k in ABLE and after that point one can lose financial eligibility. Why put funds in the stock market and risk that ? If one can’t afford to contribute much, seems risky to use equities. If one can afford to contribute plenty for their child, then you risk breaching 100k threshold.

My son applied for SSI and was rejected so far, so not an immediate concern for me, but upon appeal if successful we’ll have same issue to park back pay somewhere. I would consider ABLE (though he’s turning 26 soon which may make that difficult, unless he can be deemed eligible based on his condition prior to 26).

Virginia plan did seem an excellent choice.
My state has their own plan (only for state residents) but VA seemed a bit better.

I like it for specific purposes. For example, for a way for SSI backpay to be saved without counting against the $2,000 SSI/Medicaid asset limit. For general saving and investing, I think it is better to save for your adult disabled child in a 529 plan and transfer up to $16k a year into an ABLE account for immediate expenses only.

Incidentally, by the time most of our adult disabled children are in their late 20s to early 30s, most will transition off SSI to DAC SSDI (receiving benefits off their retired parent’s work record). When that happens only the dependent adult child’s EARNED income counts (not unearned income) and the asset limit goes away. My understanding is that the $100k ABLE asset threshold only applies to SSI (not SSDI, Medicare, or Medicaid).

https://www.ssa.gov/ssi/spotlights/spot-able.html

All the best with SSI application. My son applied at age 23, and was just approved. It is possible.
Last edited by startabatha on Sun Jan 16, 2022 7:55 pm, edited 3 times in total.
runninginvestor
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by runninginvestor »

startabatha wrote: Sun Jan 16, 2022 7:20 pm
terran wrote: Sun Jan 16, 2022 6:03 pm Last I looked it seemed like Virginia's plan was probably best.
Yes, so far it seems the best for people that don’t need the state tax benefit or aren’t TN residents. TN has the best plan, but alas closed their plan to out of state residents.
I researched last fall and came to the same conclusion VA Ablenow account . For a nationwide plan, it appears to be the best option if your state doesn't offer a tax deduction or if your state doesn't have a plan.

Also, their website is almost exactly the same as the HSA Bank web portal if you've ever used that.

It you open account, you'll get an account number. The cash account is held with PNC Bank. You'll also get a debit card. You can use the account number to automatically transfer the benefit payments, I think. Or you can use an electronic transfer from an outside bank.

Their investment options are vanguards life strategy funds. You basically have to have $2k sitting in cash, and then anything above that you can auto transfer to one of the VG funds. It takes a few days for the purchase or selling of the mutual fund to prevent market timing I suppose. If you have $10k sitting in cash, it waives the monthly account fee.

Basically it works like this:
1. Deposit $5,000 into the ABLE Account
2. After 3ish days the contribution clears and is available in your "cash" account
3. If you auto invest/sweep and set the limit to $2,000, then $3k of that $5k will be transferred to the mutual fund investment. That takes another couple days to settle.
4. When distributing for an expense, there's a button with something like "pay expense" and you follow the prompt, upload documentation (if you want) and direct whether you want a check sent it transferred back to a bank account. Or you can use the debit card to pay for eligible expenses directly.

I don't know how it works with SSI payments, unfortunately I can't help there. Just thought this may help outline the process since I didn't find their help videos very detailed.

Edit to add:
Definitely look at plans every couple years. A lot of the nationwide ones like VA seem to be competing a little as they grow. It seemed more and more standard seeing $45 or $60 annual account maintenance fees, and asset management fees in the range of 0.30%-0.60%. which is a little lower than I saw a couple years ago.
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

runninginvestor wrote: Sun Jan 16, 2022 7:39 pm
startabatha wrote: Sun Jan 16, 2022 7:20 pm
terran wrote: Sun Jan 16, 2022 6:03 pm Last I looked it seemed like Virginia's plan was probably best.
Yes, so far it seems the best for people that don’t need the state tax benefit or aren’t TN residents. TN has the best plan, but alas closed their plan to out of state residents.
I researched last fall and came to the same conclusion VA Ablenow account . For a nationwide plan, it appears to be the best option if your state doesn't offer a tax deduction or if your state doesn't have a plan.

Also, their website is almost exactly the same as the HSA Bank web portal if you've ever used that.

It you open account, you'll get an account number. The cash account is held with PNC Bank. You'll also get a debit card. You can use the account number to automatically transfer the benefit payments, I think. Or you can use an electronic transfer from an outside bank.

Their investment options are vanguards life strategy funds. You basically have to have $2k sitting in cash, and then anything above that you can auto transfer to one of the VG funds. It takes a few days for the purchase or selling of the mutual fund to prevent market timing I suppose. If you have $10k sitting in cash, it waives the monthly account fee.

Basically it works like this:
1. Deposit $5,000 into the ABLE Account
2. After 3ish days the contribution clears and is available in your "cash" account
3. If you auto invest/sweep and set the limit to $2,000, then $3k of that $5k will be transferred to the mutual fund investment. That takes another couple days to settle.
4. When distributing for an expense, there's a button with something like "pay expense" and you follow the prompt, upload documentation (if you want) and direct whether you want a check sent it transferred back to a bank account. Or you can use the debit card to pay for eligible expenses directly.

I don't know how it works with SSI payments, unfortunately I can't help there. Just thought this may help outline the process since I didn't find their help videos very detailed.

Edit to add:
Definitely look at plans every couple years. A lot of the nationwide ones like VA seem to be competing a little as they grow. It seemed more and more standard seeing $45 or $60 annual account maintenance fees, and asset management fees in the range of 0.30%-0.60%. which is a little lower than I saw a couple years ago.

Thank you for this. For now, I just plan on putting the SSI back pay into an ABLE, but might transfer funds from a 529 so the account balance meets the 10k minimum for no annual fees. It sounds like the time to process transactions takes longer than a 529. It sounds a bit tedious.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by runninginvestor »

startabatha wrote: Sun Jan 16, 2022 7:52 pm Thank you for this. For now, I just plan on putting the SSI back pay into an ABLE, but might transfer funds from a 529 so the account balance is 10k. It sounds like the time to process transactions takes longer than a 529. It sounds a but tedious.
It is a slow indeed.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by beyou »

startabatha wrote: Sun Jan 16, 2022 7:36 pm
beyou wrote: Sun Jan 16, 2022 7:10 pm For those using this to shelter assets for SSI purposes, not sure I understand the investment aspect. I read you can keep 100k in ABLE and after that point one can lose financial eligibility. Why put funds in the stock market and risk that ? If one can’t afford to contribute much, seems risky to use equities. If one can afford to contribute plenty for their child, then you risk breaching 100k threshold.

My son applied for SSI and was rejected so far, so not an immediate concern for me, but upon appeal if successful we’ll have same issue to park back pay somewhere. I would consider ABLE (though he’s turning 26 soon which may make that difficult, unless he can be deemed eligible based on his condition prior to 26).

Virginia plan did seem an excellent choice.
My state has their own plan (only for state residents) but VA seemed a bit better.

I like it for specific purposes. For example, for a way for SSI backpay to be saved without counting against the $2,000 SSI/Medicaid asset limit. For general saving and investing, I think it is better to save for your adult disabled child in a 529 plan and transfer up to $16k a year into an ABLE account for immediate expenses only.

Incidentally, by the time most of our adult disabled children are in their late 20s to early 30s, most will transition off SSI to DAC SSDI (receiving benefits off their retired parent’s work record). When that happens only the dependent adult child’s EARNED income counts (not unearned income) and the asset limit goes away. My understanding is that the $100k ABLE asset threshold only applies to SSI (not SSDI, Medicare, or Medicaid).

https://www.ssa.gov/ssi/spotlights/spot-able.html

All the best with SSI application. My son applied at age 23, and was just approved. It is possible.
At what point can the adult child collect under parent’s.
I saw 2 issues, most important was that the disability had to occur before 22, which would be hard to prove in our case. Also if one planned to wait for 70 max SS, does that mean SSDI for child waits for that year ? Seem to recall parent must be collecting SS. Maybe the lower pay parent collects at 62 to get child on SSDI ?
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

The disabled adult child (DAC) can collect under the parent's work record under three circumstances: One of the parents begins receiving their social security payments, one of the parents becomes disabled and gets social security disability payments, or one of the parent dies.

Yes the disability has to have occurred before the age of 22 in order to get DAC SSDI benefits.

Mu understanding is that regardless of the age the parent collects his/her social security, the DAC receives 50% of the parent's "full retirement age" benefit (75% if the parent is dead). If you were born after 1960, your child's benefit is calculated off your full retirement age which is 67, regardless of when you take your social security benefit. However your child cannot collect their DAC benefit until parent starts collecting social security, SSDI, or dies.
Last edited by startabatha on Sun Jan 16, 2022 8:54 pm, edited 1 time in total.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by Kenkat »

A few things on this.

An ABLE account is a form of 529 plan.

There is a limit of $15,000 per year in contributions. The source of the contributions do not matter, so I think being the representative payee would not be an issue with that.

My disabled son has a 529 plan through Stable, the State of Ohio’s plan. It uses Vanguard Lifestrategy funds as investment options, as well as an FDIC insured option. You can be conservative or plan for some growth depending on your needs and goals. Fees are reasonable overall.

There is no requirement to spend the money once in the Able account.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

Kenkat wrote: Sun Jan 16, 2022 8:53 pm A few things on this.

An ABLE account is a form of 529 plan.

There is a limit of $15,000 per year in contributions. The source of the contributions do not matter, so I think being the representative payee would not be an issue with that.

My disabled son has a 529 plan through Stable, the State of Ohio’s plan. It uses Vanguard Lifestrategy funds as investment options, as well as an FDIC insured option. You can be conservative or plan for some growth depending on your needs and goals. Fees are reasonable overall.

There is no requirement to spend the money once in the Able account.
The limit just increased to $16,000.

Thank you for your input.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by Kenkat »

beyou wrote: Sun Jan 16, 2022 8:25 pm At what point can the adult child collect under parent’s.
I saw 2 issues, most important was that the disability had to occur before 22, which would be hard to prove in our case. Yes, that is a requirement for SSDI; SSI could still apply regardless of age, but the benefit amount is typically lower there. Also if one planned to wait for 70 max SS, does that mean SSDI for child waits for that year ? Seem to recall parent must be collecting SS. Yes, correct. Maybe the lower pay parent collects at 62 to get child on SSDI ? Yes; the higher earning spouse may also be able to claim child in care benefits if not working. Then switch to the higher earning spouse’s benefit at age 70.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by Kenkat »

startabatha wrote: Sun Jan 16, 2022 8:55 pm
Kenkat wrote: Sun Jan 16, 2022 8:53 pm A few things on this.

An ABLE account is a form of 529 plan.

There is a limit of $15,000 per year in contributions. The source of the contributions do not matter, so I think being the representative payee would not be an issue with that.

My disabled son has a 529 plan through Stable, the State of Ohio’s plan. It uses Vanguard Lifestrategy funds as investment options, as well as an FDIC insured option. You can be conservative or plan for some growth depending on your needs and goals. Fees are reasonable overall.

There is no requirement to spend the money once in the Able account.
The limit just increased to $16,000.

Thank you for your input.
Good to know, thank you.
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by eye.surgeon »

I remember now one reason why I chose Oregon, they don't require you keep $2k in cash, a lot of plans do. Fairly trivial once you reach a certain balance but for my son I'm simply transferring his SSI payments automatically to the ABLE account, so for the first few years holding that much cash is a performance drain since he isn't spending it down and doesn't need cash.
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

eye.surgeon wrote: Mon Jan 17, 2022 10:01 am I remember now one reason why I chose Oregon, they don't require you keep $2k in cash, a lot of plans do. Fairly trivial once you reach a certain balance but for my son I'm simply transferring his SSI payments automatically to the ABLE account, so for the first few years holding that much cash is a performance drain since he isn't spending it down and doesn't need cash.
Doesn't he first pay his shelter and food from his SSI payment? There shouldn't be much left over after that
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by musicmom »

We're further along on this path, our daughter is 32. Disabled since birth.

She received SSI at age 18; approx $800/month.
I am her representative payee.
When I retired 2 years ago, she became a DAC (Disabled adult child).
She began receiving 50% of my FULL SS benefit, about twice her SSI.
Without her, I may have chosen to delay my benefits till 70. But overall it benefitted our family most for me to collect at 63.

We opened her first ABLE acct in Ohio just after the accts were created.
Transferred to Pennsylvania several years later. I can't remember exactly why(!).
I keep under $2000 in a local bank checking acct and use the debit card/checks for ongoing expenses.
Amounts over that I electronically transfer to her ABLE. Withdrawals deposit back to checking when needed.

I still keep less than $2000 in her non-ABLE acct. It is critical that she continues to qualify for MEDICAID that qualifies her for state funding for the developmentally disabled.
She also now has Medicare and Medicaid coverage which is so helpful.
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startabatha
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by startabatha »

runninginvestor wrote: Sun Jan 16, 2022 7:39 pm
startabatha wrote: Sun Jan 16, 2022 7:20 pm
terran wrote: Sun Jan 16, 2022 6:03 pm Last I looked it seemed like Virginia's plan was probably best.
Yes, so far it seems the best for people that don’t need the state tax benefit or aren’t TN residents. TN has the best plan, but alas closed their plan to out of state residents.
I researched last fall and came to the same conclusion VA Ablenow account . For a nationwide plan, it appears to be the best option if your state doesn't offer a tax deduction or if your state doesn't have a plan.

Also, their website is almost exactly the same as the HSA Bank web portal if you've ever used that.

It you open account, you'll get an account number. The cash account is held with PNC Bank. You'll also get a debit card. You can use the account number to automatically transfer the benefit payments, I think. Or you can use an electronic transfer from an outside bank.

Their investment options are vanguards life strategy funds. You basically have to have $2k sitting in cash, and then anything above that you can auto transfer to one of the VG funds. It takes a few days for the purchase or selling of the mutual fund to prevent market timing I suppose. If you have $10k sitting in cash, it waives the monthly account fee.

Basically it works like this:
1. Deposit $5,000 into the ABLE Account
2. After 3ish days the contribution clears and is available in your "cash" account
3. If you auto invest/sweep and set the limit to $2,000, then $3k of that $5k will be transferred to the mutual fund investment. That takes another couple days to settle.
4. When distributing for an expense, there's a button with something like "pay expense" and you follow the prompt, upload documentation (if you want) and direct whether you want a check sent it transferred back to a bank account. Or you can use the debit card to pay for eligible expenses directly.

I don't know how it works with SSI payments, unfortunately I can't help there. Just thought this may help outline the process since I didn't find their help videos very detailed.

Edit to add:
Definitely look at plans every couple years. A lot of the nationwide ones like VA seem to be competing a little as they grow. It seemed more and more standard seeing $45 or $60 annual account maintenance fees, and asset management fees in the range of 0.30%-0.60%. which is a little lower than I saw a couple years ago.

Has anyone used the debit card function with the ABLE account? Does it work just like a regular debit card where the transaction is immediate at the point of the sale at the merchant?
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Re: ABLE account: For SSI backpay and choosing an ABLE

Post by runninginvestor »

startabatha wrote: Mon Feb 14, 2022 6:15 pm
Has anyone used the debit card function with the ABLE account? Does it work just like a regular debit card where the transaction is immediate at the point of the sale at the merchant?
I have not. Didn't activate the card until/if I plan to use it as I don't check the account often.

I would imagine it works as any other debit card - at least up until the $2k that's in the cash account. Since those funds should be immediately available. Less certain if a single purchase had to tap into any investment portion.
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