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November 11, 2017

The ABLE Accounts are Here!

Recently there has been a lot of excitement in the disability community about ABLE accounts, and with good reason. Before ABLE, someone who received SSI could not have more than $2,000 in their name and keep their benefits.  Now they can own up to $100,000 in an ABLE Account.

In Massachusetts, ABLE accounts are offered through Fidelity Investments (  Fidelity calls these accounts "Attainable Savings Plans." You can open an account online and then use it like a regular checking account with a debit card and paper checks to pay bills.

Your child can qualify for an ABLE account if they are receiving SSI or SSDI benefits and their disability manifested before they were 26.  If they don't get SSI or SSDI, they can still qualify if they meet Social Security's definition of disability (have significant limitations in their day to day functioning). They should also have a letter from a licensed physician that states their diagnosis (Fidelity doesn't ask you to submit the letter).

After you open the account, you, your child, and other family members can deposit up to $14,000 per year. Your child's SSI benefits won't be affected unless the account balance exceeds $100,000, and then the benefits will stop until the balance has been reduced to $100,000 or less.

Fidelity offers different investment options such as a money market account, stocks, bonds, and mutual funds. Any interest, dividends, or capital gains that the account earns are not taxable as long as the money in the account is used for disability-related expenses such as housing, transportation, personal assistance, technology such as a computer, software, or accessories, or healthcare that is not covered by insurance. If you take out money for something that isn't considered to be disability-related (clothes, veterinary bill, season pass to Six Flags), you are supposed to report the income the account earned on your child's income tax return. This should not affect most families because of the miniscule amount most accounts are earning (Fidelity money market currently pays less than one percent).

The downside to using an ABLE account is that if there is any money left in the account when your child dies, the state can claim the funds as reimbursement for the MassHealth expenses it paid for your child after the account was opened.

If you would prefer to see the money that isn't spent eventually go to other family members, then an ABLE account probably isn't the best choice for you. Instead, you can use a traditional "special needs trust" or simply save the money in your own name.



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