Using the ABLE Account: Case Study - For Representative Payees Managing Income & Social Security Benefits

Posted by Haddad Nadworny on Sat, May 20, 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.

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Case Studies Using the ABLE Account:

I.   Protecting Social Security Eligibility

II.  Save and Have Control of Your Own Money

III. Representative Payees Managing Income and Social Security Benefits 

ABLE.pngThe ABLE is a great tool to help keep a balance below $2,000 in a Representative Payee (or an Individual's) checking account. A representative payee helps beneficiaries who need assistance in managing their social security benefits.

A representative payee’s responsibilities include:

  • Using benefits to pay for the current and foreseeable needs of the beneficiaries;
  • Appropriately saving any remaining benefits;
  • Keeping good records of how benefits are spent.*
*Source: Social Security Administration


Case Study

 The Situation:

Our client called and was very distressed that she had lost her son’s SSI income due to having more than $2,000 in his representative payee account.

The Options We Considered:

In the past, our first go-to would have been to think creatively about items or services their adult child could both benefit from and pay for.  This would allow the parents to save their resources for their family’s goals. If the account continued to increase we would then suggest a “spend down” of the account to maintain eligibility for social security benefits.

In this case, we asked if there was anything he needed that she could spend the extra money on? She had already purchased a new computer for him as well as some new winter clothes. He really did not need much of anything else. She could put the additional money into his already established and funded first party supplemental needs trust. However, this was money he had inherited from his grandparents and she considered the SSI benefits “his money”.

So another option to be considered would be the ABLE Account, which would allow for contributions of excess funds above the $2000 threshold in the representative savings account.

 The Benefits of Using an ABLE Account:

The new ABLE account savings option allows contributions up to $15,000/year into the account, to be used for the beneficiary's short term needs or invested for longer term needs. As long as the account, housed in Massachusetts, remains under $100,000 her son’s benefits will not be impacted. When reviewing the investment options, we reminded her to carefully read all the materials should she choose the ABLE Account, and to choose the best investment for the beneficiary of the account: her child.

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 Account

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