The fourth in a four-part series: ABLE Accounts—Are They for Me? Series.
This month, the Free Bridges Helpdesk Transition Tip Tuesdays explores ABLE (Achieving a Better Life Experience) accounts so that you can decide if they would work for you and your needs. In this fourth installment of the series, we examine additional information that can help you decide if an ABLE account is right for you—now or in the future.
April: ABLE Accounts—Are They for Me? Series
Part 1: What are ABLE Accounts, and What Are the Benefits? (April 6)
Part 2: Who Qualifies for an ABLE Account, and How Can Funds Be Spent? (April 13)
Part 3: How Much Can Go into an ABLE Account, and How Can I Set One Up? (April 20)
Part 4: Other Important Information about ABLE Accounts (April 27)
What else should I know about ABLE accounts?
Where can I set up an ABLE account?
Forty-four states, including Maryland, offer ABLE accounts, but you do not need to open an ABLE account in the state you live in. Seventeen states do require that you be a resident in order to set up an ABLE account under their program. However, the remaining 27 states, including Maryland, permit any qualified person to open an ABLE account regardless of residency.
May have only one ABLE account
Each qualified person may only have ONE ABLE account. If you have an ABLE account with one state and want to transfer it to another state, this is permitted, and the ABLE program staff should be able to help you do this.
Investment options available
ABLE accounts offer investment options so that your contributions will in value. This growth is tax-free. Different state programs offer different investment choices.
In Maryland, you may choose to leave the funds in a cash account or choose one of three investment options.
There are minimums and fees
ABLE accounts cost money to administer. Also, programs may have minimum requirements for setting up an account and for contributions. However, these minimums are usually quite low.
In Maryland, fees and minimums are also follows:
- Initial contribution minimum: $25
- Annual account fee: $35 (billed at $8.75 per quarter)
- Minimum contribution (after initial): $10
- Fees for investments (mutual funds): Annual fee of between 0.30% and 0.38% of fund value
Words of warning
Risk of asset forfeiture upon death
If an ABLE account owner dies with money remaining in the ABLE account, the state may file a claim for repayment of medical assistance provided to the ABLE account owner. The state may only make claims for medical assistance provided after the ABLE account was created, and the state cannot claim more money than is in the account.
College Scholarship Service (CSS) Profile
While ABLE accounts are not considered as assets for college financial aid through the Free Application for Federal Student Aid (FAFSA) form, the same rules do not apply College Scholarship Service (CSS) Profile, a private financial aid tool administered by the College Board that charges a fee to use. The CSS Profile counts ABLE accounts as assets. If you are considering applying to a school that requires the CSS Profile, it is advisable to call the Admissions Office to discuss this matter.
Using ABLE funds for unqualified purposes
If you use ABLE funds for expenses that are not qualified [see Part 2: Who Qualifies for an ABLE Account, and How Can Funds Be Spent?], those distributions will be taxable as income, and there is an additional 10% penalty for distributions not used for QDE. This can reduce the amount of money available, so it is useful to ensure that you spend your ABLE distributions on QDEs.
Join us next month as we move into May celebrating the coming of Spring and the transition from K-12 school to post-secondary life with our “Life After IEPs Series.” We’ll discuss when and why things change and delve into post-secondary rights and responsibilities in educational services, equipment, and accommodations.
Follow the Bridges Helpdesk Facebook page for more transition tips, and please contact the Free Helpdesk for Maryland Blind/Low Vision Transition Students, Families, and Educators anytime using:
- Our Accessible web form
- Email: Helpdesk@imagemd.org
- Text: Send to: (410) 305-9199
- Bridges Helpdesk Facebook page or Facebook Messenger
- Voice mail: Call (443) 320-4003, leave a voice mail message, and we will return your call
This unique project is being coordinated through The IMAGE Center of Maryland, a center for independent living in Towson, and it is funded by a grant from the Maryland Department of Education Division of Special Education/Early Intervention Services.