The ABLE Account: In US NEWS & Webinar TODAY!

Posted by Haddad Nadworny on Wed, Aug 05, 2020 @ 06:00 AM

The Special Needs Financial Planning Team John Nadworny, CFP, CTFA | Cynthia Haddad, CFP | Alexandria Nadworny, CFP,  CTFA

Featured in US News and World Report

US news and World ReportWe are proud to have Alex, John and Cindy featured in Friday’s US News and World Report article, What is an ABLE Account?”. The ABLE account, also known as a 529A account, is a tax-advantaged way for people with disabilities to build their own savings without impacting their eligibility for government benefits.  Please take a look at this helpful article that summarizes how the account works, who is eligible, contribution limits and approved uses for the funds.   Click here to take a look! 

ABLE Webinar Today!

ABLE-1Alex is the guest presenter for the Massachusetts Educational Finance Authority’s webinar, A Sibling’s Perspective: Special Needs Planning with the ABLE Account webinar this Wednesday at 6 PM. Alex will share her insight as a sibling of a brother with Down Syndrome and the financial planning needed to plan for his future. In addition, she will share her story and how she utilizes various tools, including ABLE, the tax-advantaged savings plan for individuals with disabilities, in her practice. RSVP here.

To read about additional planning strategies utilizing the ABLE account, visit our ABLE account page, the ABLE Account and Special Needs Planning, here

This is for general information only and is not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. The investment strategies mentioned may not be suitable for everyone. Prior to investing in an ABLE account investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's ABLE program. Withdrawals used for qualified disability expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

 

Tags: ABLE Accoount

Using the ABLE Account: A Case Study - Save and Have Control of Your Own Money

Posted by Patty Manko on Sat, May 13, 2017 @ 08:02 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.

Workshops Calendar

ABLE.pngFinally, ABLE to Save and Have Control of Your Own Money

Important note: Individuals earning their own money may be able to contribute their earnings, within limits, above the $15,000 limit. Please see ABLE to Work Blog published August 2018. 

One benefit of The ABLE Account is that it provides the opportunity for gainfully employed people with disabilities, who meet the qualifying requirements, to save and control their own money without fear of jeopardizing benefits. 
 
Case Study:
 
The Situation:
"Sean" was diagnosed with bi-polar disorder and other concerns in his late teens and has struggled with many issues over the years.  One critical issue for him has been, and continues to be, money. He is able to work on a part-time basis, but usually does not work for an extended period of time. Working gives him a sense of purpose, but the fear of exceeding the $2,000 limit and losing his government benefits causes a great deal of anxiety. To maintain eligibility for monthly Supplemental Security Income (SSI), an individual cannot have more than $2000 of resources in his name. When he has had income, he often saved that money but if the balance crept up to the $2,000 limit, he would become very anxious and quit his job.  His therapist wants to be sure that he continues to work and does not depend solely on government benefits since then he becomes hyper-focused on not earning any money.  
 
The Options we Considered:
One option for Sean could be to fund a 1st party supplemental needs trust (SNT) and put his money in this account. But the expense involved in creating, managing and reporting for this trust account is substantial when compared to amount of money that will be in the account.  In addition, money in the trust could not be used to pay for rent or utilities. 
Another option would be to make sure that Sean spent his money each month to stay below the $2,000 limit. The concept of “forced spending” simply does not make any sense.  Spending money in order to reduce savings below the $2,000 limit is referred to as the “Spend Down Process”. 
Sean now has a thrid option: Since his diagnosis was made prior to age 26, he is eligible to open an ABLE account. He could then save his money in this account and use it as needed. 
Prior to the creation of the ABLE account, a Special Needs Trust and the “Spend Down” were the only options.
 
The Benefits of Using an ABLE Account:
Sean's earnings do not typically exceed $15,000(2018 limit); therefore technically he could save all of his earnings for future needs.  Practically he will not be able to do so, but he will be able to set aside money for future needs just like every other person! Having the ABLE account could grant Sean some sense of relief, as well as the independence associated with managing his own savings and spending.  The greatest benefit is that he may continue to work without fear of earning too much money. This is very important to his emotional well-being and self-worth.
 

Learn the Basics. The ABLE Account:  Ten Things to Know

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

The experiences described here may not be representative of any future experience of our clients, nor considered a recommendation of the advisor's services or abilities or indicate a favorable client experience. Individual results will vary.

Investing involves risk including loss of principal. Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program.

Tags: ABLE Accoount

Using the ABLE Account: Case Study - Protecting Social Security Eligibility

Posted by Patty Manko on Sat, May 06, 2017 @ 08:35 AM

The Special Needs Financial Planning Team  Cynthia Haddad, CFP | John  Nadworny, CFP | Alexandria Nadworny, CFP  We are committed to offering educational workshops to organizations and parent  groups.  Please call Alex or click here to attend a workshop or discuss a presentation  to your group.Workshops Calendar

 

Protecting Social Security Eligibility

ABLE.pngAdults with disabilities become eligible for social security at age 18. Social Security (SSI) provides adults with disabilities a monthly benefit payment and health insurance if they meet a low income and asset threshold. To maintain eligibility for SSI benefits, an individual cannot have more than $2000 of resources in his or her name.  This includes cash, bank accounts, stocks, and U.S. Savings bonds.  Prior to the child's turning age 18, and before applying for SSI, make certain that the child meets this requirement. One strategy could involve transferring money to an ABLE account as this can help reduce savings beneath the $2,000 threshold and avoid the spend-down process.

Learn the Basics. The ABLE Account:  Ten Things to Know

 

Case Study:

The Situation:

During the settlement of an estate, the personal representative (PR) (may also be known as the executor) of the estate discovered one of the beneficiaries was receiving government benefits. While this person could definitely use the funds to pay for furnishings in her home and some much needed dental work, if she received the inheritance directly, it would disqualify her from the important benefits she was receiving, as it would bring her above the $2,000 asset limit she is allowed. The personal representative was required to distribute $33,000 to this beneficiary prior to the projected closing of the estate in February of the following year.

The Options we considered:

In discussing the current situation with the beneficiary and the PR, we discussed options for the purpose of educating the parties involved of establishing a 1st party supplemental needs trust (also known as a d4A or Payback trust) where the beneficiary could transfer the entire inheritance to the trust and continue to receive her benefits. 

We also discussed the option of distributing a portion of the inheritance this year and then again next year using an ABLE account. If the PR distributed $18,000 this year, the beneficiary would be able to buy new furnishings that she needed with about $2,000, get the needed dental work for another $2,000, and deposit $15,000 (2018 limit) into an ABLE account, assuming she had made no prior deposits into the ABLE in this year. The PR would then need to make the final distribution of about $15,000 to the beneficiary by the February of the following year. If the PR does this, the beneficiary could then keep $1,000 in her savings account (still under the $2,000 limit) and add an additional $15,000 to her ABLE account. The beneficiary would then able to use these funds for qualified disability expenses as needed without losing her SSI income and other benefits.

The Benefits of Using an ABLE Account:

Because of the amount of the inheritance, she did not need to go through the expense of hiring an attorney to establish a 1st party supplemental needs trust, find a trustee, file taxes, and then have to ask someone for money when she needed it.  She was already living independently and managing her own expenses fairly efficiently.  The ABLE account allowed her to continue to receive her benefits and use the funds in the account as she needed them.

Questions? Talk with us.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes.

The experiences described here may not be representative of any future experience of our clients, nor considered a recommendation of the advisor's services or abilities or indicate a favorable client experience. Individual results will vary.

Investing involves risk including loss of principal. Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program.

 

Tags: ABLE Accoount

Answers to FAQs: How to Use the ABLE Account

Posted by Patty Manko on Sat, Jun 20, 2015 @ 06:00 AM

faq

 

We have received many questions, from both families and professionals, about how to incorporate the ABLE account into their planning. We sat down with John Nadworny to ask him these questions and share with you the answers. 

Here is the first in a series of blogs featuring answers from John to questions about how to use the ABLE Account.  We will continue to publish information about the ABLE Account as it becomes available. 

Q: When will the ABLE account be available and how do I set it up?

John:  The US Treasury made a commitment to issue final regulations by June 30, 2015. At this time, it is uncertain as to whether that deadline will be met.  Although some states have initiated offering the ABLE account, there may be future issues depending upon Federal regulations. 

Massachusetts has formed a task force (of which John is a member), to craft implementation of the ABLE Account. Although it is difficult to give an exact date at this time, the task force estimates ABLE accounts to be available in early 2016.

Q: The ABLE account sounds great but will using it effect my eligibility for government benefits?

John One of the main purposes of the ABLE account is to allow individuals with disabilities to save without jeopardizing their eligibility for government benefits. It is important to be aware that SSI eligibility is suspended if account exceeds $100,000. Although, Medicaid eligibility continues if account exceeds $100,000.

Q: My son is about to turn 18 and he has a UTMA account with a balance of about $12,000 from gifts and other sources.  Would an ABLE account work for him  ?

John: The ABLE Act allows the transfer from UTMA or UGMA accounts to an ABLE Account.  At this point there are no limits on how much can be transferred from one of the above accounts to an ABLE Account.  This is one of the most significant benefits of the plan.

However, there are considerations when making this transfer.

ABLE account contributions must be made in cash.  Both the personal and tax consequences of liquidating the UTMA account holdings need to be considered when making this transfer.  In this case, due to the relatively small amount, $12,000., the tax consequences will most probably not impact the ABLE being the right choice for these funds.

If there are significant assets involved, a trust should always be considered as an option.  The term significant is different for everyone, but a starting point may be $50,000 for many families.  Again, every situation is different; therefore you should speak to a planner who specializes in Special Needs Planning or a qualified estate planning attorney.

Q: I want to gift to all my grandchildren while I am alive. Can a grandparent give a gift to an ABLE account when gifting to grandchildren's 529 plan accounts?

John:  Like a 529 College Savings Plan, the annual limit that can be deposited into an ABLE Account will likely be $14,000 each year (based on 2015 limits). Although I have not seen this in the plan’s language, this amount will likely increase as it is tied to the amount that a person can annually gift for estate tax purposes. However, currently with a 529 College Savings Plan a person can deposit up to $70,000 in one year but not contribute any more over the next 5 years without filing a gift tax returns. This is a detail that will probably be worked into the plan as the US Treasury finalizes the regulations.

When account balances exceed $100,000 there will be an offset for an individual’s SSI check.  Also, although your grandchildren may have more than one 529 account, an individual may only have one ABLE account.

 

Click here to  Send us your questions  about the new ABLE accounts.

Journalists may contact John directly via or by telephone 781-756-1804.

The opinions voiced here are for general information only and not intended to provide specific advice or recommendations for any individual, nor intended as tax or legal advice.

There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes. Investing involves risk including loss of principal.

Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program. Consult with your tax adviser before investing.

 

Tags: ABLE Accoount

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