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Understanding ABLE Accounts With Matt Syverson
Episode 338
Matt Syverson is a Certified Financial Planner and Certified Kingdom Advisor in Overland Park, Kansas. He’s also a specialist in helping families understand and set up ABLE accounts.
WHAT ARE ABLE ACCOUNTS AND HOW DO THEY COMPARE TO 529 EDUCATION SAVINGS ACCOUNTS?
ABLE accounts, akin to 529 education savings accounts in terms of contributions and tax treatments, are designed to assist individuals with disabilities by allowing for the accumulation of resources without affecting their eligibility for government assistance.
- ABLE accounts, initially referred to as 529A plans, are intended for individuals with disabilities, allowing them to save beyond the typical asset limits set by government assistance programs.
- These accounts enable the saving of funds for a broad range of needs beyond just educational expenses, providing a more flexible financial support system for people with disabilities.
WHO IS ELIGIBLE FOR AN ABLE ACCOUNT, AND WHAT ARE THE CONTRIBUTION LIMITS?
ABLE accounts are specifically for individuals receiving or eligible for Supplemental Security Income (SSI) due to a disability onset before age 26, with annual contribution limits matching the federal gift tax exclusion amount.
- Eligibility for ABLE accounts extends to individuals with significant disabilities with an onset before age 26, who are recipients of or qualify for SSI, allowing for a greater financial cushion without risking their SSI benefits.
- The annual contribution limit to an ABLE account is set at $18,000, aligning with the annual gift tax exclusion, enabling families and the individual to contribute without tax penalties and without affecting the individual’s SSI asset limits.
HOW DO ABLE ACCOUNTS AFFECT SSI BENEFITS, AND WHAT ARE QUALIFIED DISABILITY EXPENSES?
ABLE accounts do not count towards the SSI $2,000 asset limit, and funds can be used for a wide array of disability-related expenses without impacting SSI benefits, offering significant flexibility and financial relief.
- Contributions to ABLE accounts and the savings therein do not affect an individual’s eligibility for SSI as long as the account balance stays below $100,000, thus providing a secure means to save and support disability-related needs without jeopardizing SSI benefits.
- Qualified disability expenses are broadly defined, covering any costs related to living with a disability, including but not limited to housing, education, healthcare, and personal support services, thereby offering a versatile tool for financial planning and care.
HOW ARE ABLE ACCOUNTS MANAGED AND WHAT ARE THE INVESTMENT OPTIONS?
ABLE accounts are state-sponsored, similar to 529 plans, with investment options ranging from aggressive to conservative portfolios, as well as offering FDIC-insured options with debit card access for day-to-day expenses.
- Each state sponsors its own ABLE program, with only a few exceptions; individuals can choose to open an account in any participating state, often guided by the specific features and benefits offered by each state’s plan.
- Investment options within ABLE accounts vary, allowing for tailored investment strategies according to the beneficiary’s needs and risk tolerance, including the possibility of a portion being allocated to a checking-like account with FDIC insurance for immediate needs.
ABLE National Resource Center:able nrc.org
ON TODAY’S PROGRAM, ROB ANSWERS LISTENER QUESTIONS:
- I have a 401k from a previous employer and a portable pension; I'm wondering if I can roll these over into an existing IRA Roth, or if I need to consolidate them into a new IRA.
- My
Published on 1 year, 9 months ago