Savings plan for disabled becoming more popular

ABLE is growing up fast.

Five years after its launch, the ABLEnow savings program — as it is called — hit a milestone. The accounts, some in all 50 states plus the District of Columbia, now hold more than $100 million in assets for more than 12,000 account holders.

Not too shabby for a tax-advantaged disability savings program that is not as well known as its cousin, the 529 college savings plan.

Created by Congress in 2014 and rolled out gradually state by state two years later, ABLE accounts are designed to help individuals with disabilities save and fund a variety of qualified disability expenses, such as education, transportation, housing and employment training.

Here’s the kicker: As long as eligibility rules are followed, account holders can use ABLEs without endangering eligibility for government programs such as Medicaid and Supplemental Security Insurance.

Earnings in the accounts — officially the Achieving a Better Life Experience program — grow free from federal taxes, and states may offer tax incentives, too. The accounts can be opened by someone who developed their disability before age 26. Family and friends can contribute as well, just like the 529 accounts.

Annual contributions are limited to $15,000 in 2021, while the total account value can’t exceed $500,000.

The average account balance is well under those limits, at $8,368, according to first quarter 2021 data compiled by ISS Market Intelligence.

The national ABLEnow program is administered by the Virginia529 program, the nation’s largest college savings plan. While the accounts are still not sponsored in all 50 states, eligible individuals are not required to open an account in their home state.

Several programs, including Virginia’s, are open for national enrollment, according to the ABLE National Resource Center.

ABLEnow account holders can choose from several investment options based on risk tolerance, and there are no minimum initial contributions or enrollment fees. There can be monthly account service fees of $3.25 and also some asset-based fees depending on the program. (For more details, go to www. ablenow.com).

Individuals can also open accounts through the ABLE America plan, a partnership between ABLEnow and the American Funds group.

Over the past year, there’s been a 10% increase in new ABLEnow accounts, and the average portfolio has grown 24% through May 2021.

The growth can be attributed to several factors, including funneling stimulus checks into the accounts, people spending more time at home and focusing on savings, and, of course, a rising stock market.

“While everyone finds themselves in different financial circumstances, those who are able to save are doing so,” said Mary Morris, chief executive of Virginia529.

But for many eligible individuals with disabilities, ABLEnow accounts can seem “too good to be true,” Morris said.

“When we explain that funds in an ABLEnow account won’t impact disability services and supports, many people look for the catch as they are so accustomed to not being able to save and plan for the future,” she said.

To spread the word about ABLE, supporters are turning to social media, Morris said, with webinars and other video conferencing tools. It’s a message worth sharing.