In this episode of Stress-Free IEP®, Frances Shefter interviews Kelly Nelson, Outreach and Communications Manager for Maryland ABLE. Kelly is passionate about promoting personal choice, independence, and economic stability for individuals with disabilities through ABLE accounts. Through her dedication and expertise, Kelly strives to empower individuals and families to achieve their goals of independence and financial security.
Tune in to the episode to hear about:
ABLE Accounts and Eligibility: Kelly Nelson defines ABLE accounts, highlighting the significance of their use as a tool for individuals with disabilities and their families.
Tax Advantages and Financial Planning: Kelly emphasizes the tax advantages of ABLE accounts making it an attractive option for families to plan for their loved ones’ future financial needs while maximizing benefits.
Investment Options and Flexibility: Kelly explains the investment options available within ABLE accounts and the different risk tolerances and financial goals.
Background on Kelly Nelson: With a background in financial planning and a personal connection to disability, Kelly brings a unique perspective to her work, combining her expertise in finance with a passion for social justice.
Read the whole transcript from this episode below.
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Stress-Free IEP®:
Frances Shefter is an Education Attorney and Advocate who is committed to helping her clients have a Stress-Free IEP® experience. In each podcast, Frances interviews inspiring people to share information, educate you, empower you and help you get the knowledge you need.
Voiceover: Welcome to Stress-Free IEP® You do not need to do it all alone. With your host, Frances Shefter, Principal of Shefter Law. You can get more details and catch prior episodes at www. Shefterlaw. com. The Stress-Free IEP®video podcast is also posted on YouTube and LinkedIn, and you can listen to episodes through Apple podcasts, Spotify, Google podcasts, Stitcher, and more. Now, here’s the host of Stress-Free IEP®, Frances Shefter. Hello everyone and welcome to the show.
Frances Shefter: I am so overly double, like, excited about today’s show because we are learning about ABLE accounts. And I know all of you out there listeners are like, well, wait, what’s an ABLE account? What’s a special needs trust?
Those are questions I get all the time. So I was so [00:01:00] excited to meet Kelly Nelson from Maryland ABLE, um, and that she agreed to come on the show to talk to us about what ABLE accounts are and how they can be helpful. So Kelly, take a minute, introduce yourself a little bit and let’s get right into about what ABLE accounts are.
Kelly Nelson: Awesome. Thanks so much, Frances. I really appreciate being invited to be on the show with you today. I’m Kelly Nelson. I’m the outreach and communications manager for the Maryland ABLE program. And I always like to share with people that in addition. To working with Maryland able or for Maryland able. I’m also a parent of a 20 year old young lady with multiple disabilities. Who’s had an able account herself, um, for the last five years. And I have had this unique opportunity to have some. extra practical life experience and helping her to manage the account. And it’s just really given me an opportunity to see how it’s helped her to grow in her self confidence and her [00:02:00] independence, as well as I learned some really important financial literacy skills. And also given her father and I a way to be able to plan and prepare for the future. So I always like to, to share that I’ve had that opportunity and I think it really has helped me as I’ve been able to connect with students and other older people with disabilities and family members throughout the state of Maryland, just helping them to, um, access that information about how ABLE accounts can help them.
Frances Shefter: That is so great. I love, I talk about my kids also all the time, um, and it’s important, especially when we’re here in the neurodiverse community and giving information, being a parent, um, is just such a different level, being a parent of a, of a neurodiverse child, no matter what the disability is, no matter how severe, minor, whatever, it’s, we all get it, you know, and it’s, it’s something you can’t explain until you live it, right? Agreed. And it’s just such a different coming from another parent that’s living it is so much [00:03:00] more helpful at least I find because You get me like you understand our stresses, our worries and all of that.
Frances Shefter: Um, so ABLE accounts, like what is it? Like, cause everybody always says, well, why would you do an ABLE account instead of a special needs trust?
So what is ABLE account and how is it different?
Kelly Nelson: Yeah. Well, ABLE accounts are a way for people with disabilities, students, um, with disabilities, their family members to be able to sign up. Save money or invest money tax free and also be able to do so without jeopardizing any of those critical federal and means tested benefits. Things such as SSI or Medicaid and various types of waivers. So the thing, um, about public benefits, while they’re helpful in so very many ways, there are some, um. Challenges to it. So a lot of people that qualify for say SSI benefits, they have an asset limit of just $2,000, meaning that they’re never permitted to be able to [00:04:00] have assets.
More than $2,000 without jeopardizing their, you know, SSI benefits, their, their Medicaid and different waivers. So, thanks to some federal legislation that was passed back in 2014, um, called the, uh, Stephen a back. Achieving a Better Life Experience Act, or the ABLE Act, as we call it. It gave people with disabilities and their families the ability to save beyond that 2, 000 and actually be able to have up to $100,000 in their ABLE account and still maintain all of their benefits.
So, it was a real game changer for them. for people as it really answered that question of, Hey, how do we save and plan for our future and have those dreams and those goals, but not being able to exceed $2,000, right? So that was creating that cycle of poverty for people with disabilities, as well as a real inequity for how parents or family members were trying to plan and prepare for the lives of their children. Children as they [00:05:00] grow into adulthood, and let’s face it. Eventually, most of us are going to find that our Children will probably be here after we’re gone at some point. So we want to be able to do some planning. So that’s where we see able accounts and special needs trust. very helpful collaborative planning tools
Frances Shefter: That’s great. I, for some reason, I thought that ABLE accounts did impact benefits. That’s great to know that they don’t, um, because that’s huge, but what, like what, I mean, I guess it’s, it has to be an ABLE account to not impact. Cause if you’re in a regular checking account, then it would impact. So that makes sense.
Like you have to get the special account, but like, what can anybody open an ABLE account? Like what, what would. allow somebody to be qualified for an ABLE account?
Kelly Nelson: Sure. So there’s two criteria basically, uh, that you have to meet in order to have an ABLE account. And the first is that a person has to have a disability that, um, occurred before their 26th [00:06:00] birthday.
And the second is that they have to have a disability that meets the Social Security Administration’s definition of a disability. So this is going to be something that is going to be present without, with the person throughout their lifetime and have a significant impact in either their ability to learn or maintain full time employment.
So it’s going to be a more significant disability. But when we talk about disability types, people say like, what though? Like what kind of disabilities? So that could be someone with blindness or low vision, someone who’s deaf, hard of hearing. It could be people with intellectual disabilities, developmental disabilities, autism, spina bifida.
I mean, there’s the range of disabilities is vast. It just is going to have to meet that social security definition. Meaning that it’s going to be present with them throughout their lifetime. So, anyone that goes, is interested in enrolling in an ABLE account, one of the first questions it always asks in that process is, are you currently receiving SSI benefits or SSDI benefits?[00:07:00]
Because that way, Social Security has already examined that documentation. They know that they have that, um, met that criteria. But for those who may be listening who have a family member that does not currently receive SSI or SSDI, that’s okay. As long as they’ve had that disability before age 26, they can just get a physician’s certification form signed and that would suffice.
Frances Shefter: So, okay, so then when you say meets the definition, it’s not You don’t have to qualify for SSI. You just have to meet the definition, meaning how, like, like what level, like, so, you know, autism, for example, ASD, you know, we have kids, it’s a spectrum disorder, we have kids that are going to be 100 percent functioning in society, you know, like no issues, adult, college, own homes.
All of that other stuff. And then we have the kids on the other end of the spectrum that are more challenged and most likely will never live [00:08:00] independently. So can both qualify or is there a restriction somewhere in there?
Kelly Nelson: The, the, as long as they, even if they’re not qualified, even if they’re not receiving SSI benefits, if they can show that they have a diagnosis of autism.
then, um, they’re, they’re able to enroll for an ABLE account. And sometimes, you know, I think when we think of families that we’re working with, with younger children, a lot of times, they’re not currently receiving SSI benefits because if they, for example, my daughter, she was born, um, with multiple disabilities.
She certainly had disabilities that are going to be with her throughout her lifetime, but had we applied for SSI benefits when she was younger, She would have been denied because Social Security examines the entire family’s income. Mom and dad, if they’re working, most likely their income is going to exceed that income threshold and they don’t qualify.
But when that individual turns 18, that’s when we see people applying for SSI and Social Security’s just looking at that one person’s income. And that’s when we see [00:09:00] that they’re usually eligible to receive SSI benefits. So, that’s
Frances Shefter: Got it. And then what happens if you, let’s say you qualify, like, is it you qualify, you open the ABLE account, that’s it, you have it, like, you don’t have to re qualify?
Kelly Nelson: There is no, um, redetermination. Yeah, you just, you, um, in the enrollment process, uh, there’s a self attestation that you have a disability that meets that before age 26 criteria. And, um, yeah, and then you don’t have to, Go up for any re enrollments or, you know, re certifications.
Frances Shefter: Because I’m thinking, I’m thinking of our kids on the spectrum. That’s a lot of my, there’s like, you know, ADHD, Autism Spectrum, um, is where my focus is and, uh, and anxiety because all three are comorbid pretty much, you know, they overlap so much. Um, but, um, like for the kids that we know we’re going to go to college and all of that other stuff, but parents want to provide for them in a way, just, you know, it’s, [00:10:00] I guess, another way to technically save for your child.
Like why? Like somebody that has money to leave for their kids. Like, why would an ABLE account make more sense even if they don’t qualify for SSI anyway? Does that make sense?
Kelly Nelson: Well, there’s tax advantages to having an ABLE account. For example, any money that is saved or invested in the ABLE account is tax free.
You don’t pay federal or state taxes on those earnings. And there’s no penalty for taking those, to taking withdrawals on the account, provided that The money is being utilized for the beneficiary of the account. So there’s tax advantages that way. There’s also the tax advantages of family and friends that are contributing to enable account.
For example, um, money that my husband and I are saving and investing for our daughter’s future. We get an income deduction or an income subtraction on our Maryland state taxes. And then we turn around and we’re using the funds in that ABLE account to pay for everything that our daughter needs and that [00:11:00] we were paying for anyway, you know, her braces, um, summer camps and things like that.
And we’re able to take advantage of an income deduction. And that is true. Um, for families that are just planning on saving or investing. They’re able to actually, um, subtract up to 2, 500 per person per ABLE account. So if mom and dad are married and filing joint returns, they can claim 5, 000 of that, of those contributions as an income subtraction.
Like, that’s huge.
Frances Shefter: Like, now I’m thinking, like, why wouldn’t, why wouldn’t any, everybody have an ABLE account, basically, you know? And then, like, for, for example, like, let’s say, um, there’s somebody, you know, has the Maryland ABLE account. I’m assuming you have to be a resident of Maryland.
Kelly Nelson: Maryland is one of 47 able programs nationwide. Many of those programs are open for national enrollment as is Maryland. So we currently have, I think, 6, 228, uh, Maryland able account [00:12:00] holders. The majority of them are Maryland residents, but we do have, um, a couple of hundred that are. in another state for whatever reason they chose Maryland able or maybe they lived here at one time and they relocated to another state and they’re able to either keep variable account with Maryland or roll it over to the state that they live in provided they have an able account.
Frances Shefter: So would the person putting money in need to be a Maryland resident to get the deduction or is that part of the national?
Kelly Nelson: Well, the good news is that anybody can contribute to an ABLE account. So grandma who lives in Florida, she can contribute to someone’s ABLE account, right? But since she doesn’t pay Maryland state taxes, that tax, you know, some, it doesn’t really apply to her because she doesn’t pay Maryland taxes.
So she would probably pay maybe Florida income taxes or something, but we don’t, um, the Maryland ABLE. program does not provide an income deduction for other, for [00:13:00] other people’s, other states, um, taxes.
Frances Shefter: So then, of course, my brain is going to, okay, so if grandma wants to put 1, 000 in the ABLE account, grandma gives the 1, 000 to mom and dad, mom and dad put it in the ABLE account, so mom and dad can get the tax deduction and grandma’s still done what she wants to do.
Kelly Nelson: Yeah, absolutely. Grandma can contribute money to the parents if she wants and, and they could, you know, um, handle, have that contribution however they want. There’s, um, I guess flexibility on that, but certainly, you know, that was one of the things when I first heard about ABLE, um, you know, my daughter had an extraordinary medical journey when she was first born, um, for many, many years, actually, that really kind of put us back financially for a long time.
So I thought, Oh gosh, you know, I don’t even think I have any extra money to put it in ABLE account for her right now. But then I got to thinking about it. I said, you know, We’re her parents. We’re providing for all of her needs anyway. That’s what parents do. I may as well take some of that money that I know I’m going to spend [00:14:00] anyway, put it into the ABLE account and turn around and use it for things that she needs.
And then we get an income deduction on our taxes. So it really, it really made a lot of sense to me as a parent to do that.
Frances Shefter: Yeah, no, that makes sense. Cause I mean, that’s where my brain is going is like, why wouldn’t you do it? Cause again, you’re spending the money anyway. You might as well get the tax break.
Um, because as we all know, are in order to raise kids. Insurance doesn’t cover it or sometimes insurance might cover it, but it’s not exactly the quality you want or the timing you want or all of those other things. So we tend to go out of pocket because as parents, we do what we have to do for our kids, right?
We make it work. We figure out a way. Yeah. That’s so, wow. I’m just, I’m like mind blown because I’m so glad I have you on the show because for me personally, I mean, both my kids are neurodiverse. So now I’m like, oh. Okay. Wait a minute. Why haven’t we done that? Um, so like what, so like that’s the tax benefits and stuff, but like what, for example, like, I mean, instead of a 529 or like [00:15:00] for college or something like that, are there any restrictions on the ABLE account of withdrawing and what you can use it for?
Kelly Nelson: Well, that’s the wonderful thing about the ABLE accounts is, you know, our actual regulations, um, Are held within the Internal Revenue Code. We’re section 529A. If you’re ever suffering from insomnia and want to read those regs, you can check it out. But we’re actually sort of sisters in the law, um, next to 529.
So there’s 529 College Savings. You guys have heard of those. We’re 529 a cause there’s some parodies there as well as some differences. But what the regulations say is that able funds, sure. They’re intended for saving and investing, but you can access the funds at any time. There’s no penalty for early withdrawal.
There’s no withdrawal fees. If you’re using the money, you know, for the beneficiaries, um, health, independence, or quality of life. So I think, um, you know, it’s, it’s just advantageous because, um, If you’re saving in [00:16:00] a regular. 401k or savings account or even 529, if that person with the 529 is the owner of that account, they’re all countable resources.
So again, for someone who’s not receiving SSI benefits, it really doesn’t matter as much. But for those of us who have kids that are going to be recipients of those SSI benefits, We really need to make sure as we move forward in our planning that we don’t have money in their own name And this includes by the way people that are going to be leaving money to them in their future I wish I had a dollar for every time.
I got a phone call from someone who said Oh my gosh, I didn’t realize that you know, great uncle Bernie, he passed away and bless his heart. He left my son, you know, $20,000 of his life insurance. And it’s now we’re over resourced. We’re going to lose our benefits. What can we do? Right? So that’s where we look at having those ways to be able to save for larger amounts as well.
It’s important [00:17:00] to know with an ABLE account. people can contribute up to 18, 000 per calendar year. The balance can continue to grow, but every year there’s, there’s that 18, 000 contribution limit. So let’s take uncle Bernie, for example, bless his heart, left $20,000. Um, you could only put 18 of that amount, if that amount into the able account.
So that’s where we see a need for multiple Planning tools for families.
Kelly Nelson: A lot of times we see people, see people have both ABLE accounts and special needs trust because with a special needs trust, and there’s three different kinds, but there is no limit on how much money you can contribute to enable, I’m sorry, to a special needs trust.
You could fund it with a dollar. You could fund it with 25 billion if you could, right? So that’s the big difference where we see those larger amounts needing to have a place to You know, to be received and maintained
Frances Shefter: and on special needs trust. Just want to let our listeners know if you look [00:18:00] back and we’ll probably put the link in the show notes.
I interviewed Todd Bornstein, who’s an estate planning attorney, um, who explained special needs trust so that you could learn the other side, the other tools as well. I mean, like this is such a huge thing because again, there’s so much out there for parents that you don’t even know, you know, like I knew there were able accounts.
I knew, okay, that might be something I don’t want to consider in the future. But not like really dug in and had the time to figure it out. And that’s like, I’m so excited. Cause that’s part of the reason of my podcast is, Hey, parents, check it out. There’s this, or there’s that. And as a podcast, you can listen to it while you’re driving, while you’re doing the dishes, while you’re trying to sleep.
What, you know, whatever it is that it’s consumable information in an easy digestible way. Um, so you were saying, so owner of the account. So the person with a disability is the beneficiary.
Kelly Nelson: Actually, that’s a little, that’s a little different as well with ABLE accounts. It’s always the person with the disability that is both the [00:19:00] owner of the account and the beneficiary.
Now, we realize when we’re talking about children or someone under the age of 18, someone has to be on that ABLE account with them. It could be mom or dad or grandparent, whoever is the, is the caregiver, right? But the account is always owned by the person with the disability and the person that may be helping them manage the account.
In ABLE space, we call that the authorized legal representative or the ALR. That’s just our words for, hey, who can help open and manage that ABLE account on their behalf. And when the child is say 18 and they’re an adult, and if they’re able to manage the ABLE account on their own, fantastic. They’re able to do that.
We just complete a remove ALR form and the person’s ready to rock and roll and manage their own account. Sometimes we see. You know, some of our, our family members that even when they’re an adult, they need help managing financial accounts. Some, some people say, you know, mom, I know I can do it, but I’d like for you to [00:20:00] continue to help me manage this account.
So they’re able to do that if they want to. And certainly we sometimes meet people that have family members that are unable to provide consent for various reasons. In that case, we have, we see family members that have either guardianship or maybe power of attorney, but anyone that is a family member, even if they don’t have guardianship at the time, and this is a new, uh, change to our regulations within the last year.
If they don’t have guardianship for an adult and they are a family member, it could be a spouse, a parent, a sibling, a grandparent, or someone serving as rep payee, they can also help them to open and manage that legal account.
Frances Shefter: So my brain goes into the, okay, we have our kid that’s, that’s not adverse, but is going to live independently.
Um, mom, dad, grandpa, aunt, uncle been contributing. You know, we’ve got a nice big account of a hundred thousand dollars [00:21:00] we’re, you know, like, cause we’re maxing out. Um, when that child turns 18 and technically they’re able to manage the account on their own. Can they come in and be like, bye mom or dad, whoever’s on it, it’s mine now and take all the money.
Kelly Nelson: Technically, the person that owns the ABLE account always has access to the funds. Um, so if they wanted to remove their parents, if they wanted, you know, to have their parents removed as the ALR, then they can manage that account. They can do with it what they want. So sometimes we see, um, adults that parents don’t have guardianship, but rather they have POA over financial matters because there are some complexities to that and they need some help.
So if a parent has a POA to manage their finances, then they could provide that and just say, you know, I’m given POA and I’m going to help with this account. But I think the important thing to know is that we have just [00:22:00] as you know, every, every person is unique. All ABLE account owners are also unique. We have people with disabilities that may have CP and when they’re an adult, they, they They can manage that account themselves.
And we want, we believe that, you know, people with disabilities should be involved in managing their own finances to the, to the best of their ability. So what’s nice about an ABLE account, especially for an individual with a disability who is able to manage, it’s different in a special needs trust because you can have a special needs trust, but that person never has direct access to those funds, uh, for, you know, they have to have, go through a trustee.
So with an ABLE account, A person with a disability who is able to manage it can access those funds. And that’s why they’re really good collaborative planning tools. They’re not in competition with one another. A lot of times people start with ABLE accounts because, you know, um, with special needs trust.
They’re, they’re fantastic finance, you know, [00:23:00] very finely nuanced products, but they take a long time to develop because the parents have a lot of work to do. And I know, cause I also have one of those as well. It took us several months in that planning process. Enable account you can open in 15 minutes.
There’s also a difference in the cost of having these two different accounts that the 35. It’s billed quarterly. So, you know, that was much more affordable than what we. paid for our special needs trust, which range in cost between 1000, 2000 up to 14, 15, 000, depending upon how, how much planning goes into that process.
So, and they’re both equally valuable, but I think there’s also some differences as well as who can, you know, I want, I want, I hope that my daughter, um, I don’t know what. How things are going to go farther down the road, but I’m trying to include her in an understanding about finances. So I want her to have some access.
Whereas money that’s in her trust, she will not be able to [00:24:00] access directly. They’ll always be a trustee and
Frances Shefter: that makes sense. I’m just thinking along the lines of like an 18 year old just graduated high school and like, Oh my God. I got $50 grand, let me go buy a $20,000 car, you know, like might not be spending it as wisely as the parents would want.
Right.
Kelly Nelson: And that’s part of that, you know, that, uh, you know, financial literacy process that we go through as parents. Cause that could happen if they didn’t have a disability and somebody had money in an account for
Frances Shefter: that. You know, that’s,
Kelly Nelson: that happens too, but definitely I understand. I mean, I know that we work really hard to be able to save and plan for our daughter’s future.
I would not. be very happy if she decided to take all of her money out and buy, you know, maybe thousand dollar vehicle or something like that. I agree.
Frances Shefter: Right. So we’re working on that. Yeah. But I guess that’s the thing is to, to think about. And then the parents, I’m just also thinking about the people in the higher tax bracket of what and how, um, you know, I [00:25:00] should say higher, but like, you know, the, that might have the hundred thousand dollars to, you know, put somewhere or something.
Um, but yeah, it makes sense. You kept saying about investing. So like, what does that look like with investing with an ABLE account? Oh
Kelly Nelson: yeah, great.
Kelly Nelson: So here in Maryland, we have, we have some options when people have an ABLE account, it’s an asset protected account, meaning social security and other, and other federal or state means tested benefits cannot count those.
funds against them and when being eligible for their benefits. But we also offer either a cash savings option or four different investment options. So right now our cash savings option, that’s an FDIC insured up to $250,000. We’re currently, they’re paying like almost 6 percent interest. So it’s doing really well.
And a lot of our account holders like that because they’re saving their own money, especially, uh, people with disabilities that are working and contributing their own [00:26:00] funds from their job there, they’re really all about, Hey, I want to put this money in there. And I want it to be there next month when I come back.
Frances Shefter: and
Kelly Nelson: hopefully, you know, they are, they’re, they’re happy with their interest and stuff. Then there’s other folks like, like I think of parents that have a child that was born with down syndrome and they open their ABLE account when the child is just a couple of months old and they are really looking for just a long term investment product.
So they’re not really planning on accessing the funds that often for them. We have four different choices. These are Portfolios that are managed by Vanguard. Um, so they, there’s just one for everybody’s different, uh, risk levels and tolerances and how long they want to be in the investment. We have a, um, what we call the moderate, um, portfolio, which is 80 percent in bonds and just 20 percent or it’s actually called the conservative one, so it’s mostly in bonds with a little bit in the stock market.
Then we have another one that is a moderate, which is a 50, 50 split [00:27:00] between stocks and bonds. And then for people who are really looking for that long term investment, we have the aggressive option, which is, um, 86 percent in the stock market and 14 percent in bonds. So these are folks that are going to watch that rise and fall over decades, right?
They’re not going to be like, Oh my goodness, you have to have the risk free option. Tolerance for that. Right. But, um, and then we also have it a hundred percent in bonds. So we do have several different options. And the best part about this is for people that are listening, you’re like, Oh my gosh, like I’m a parent of a, with a child with special needs.
My life is complicated and everything. I don’t have time to think about like what’s investment portfolio. I don’t really know what to do. The great news is with ABLE, every single time you make a contribution to the ABLE account, you direct. Where you want that money to go. So let’s just say most of the time you’re putting it in the cash option because you know, and then in a couple of months you’re taking it out to pay for summer camp or something.
Um, but then sometimes you’re like, you know what, this time I want [00:28:00] to direct it towards that moderate investment option. And that’s, um, you know, they can, you can do that. And I love that flexibility.
Frances Shefter: That’s awesome. And then who manages? I’m thinking about my father. My father was, how he invested money was crazy.
Amazing. It worked, you know, but, but he, he wanted to manage like what stocks were bought and what, you know, and buying and selling and all of that. Who does that in the ABLE accounts?
Kelly Nelson: So with Maryland ABLE, you know, the, the, the ABLE program in Maryland is managed by, The state of Maryland underneath the state treasurer’s office, but we had to partner with financial institutions because the state is not a bank.
The state of Maryland is not a financial institution. So we have the bank of New York Mellon that holds all those cash assets. Um, forgot to mention that we’re up to almost 87 million in assets being managed by, um, you know, being saved by. People with disabilities who are at one time [00:29:00] told they could never have more than $2,000.
So I’m always proud of these savers and these investors that are putting that money in there. But anyway, so we have the bank of New York melon who holds that money in a giant trust. Um, and you know, it keeps the accounting of.
Kelly Nelson: Whose funds are enabled in each able account. We also partner with Vanguard.
That’s our investment manager. So what they’ve done is they’ve developed these portfolios, this mix. So somebody doesn’t get to call up and say, Hey, buy me like X number of Starbucks and Buy me X percentage of Amazon. It doesn’t really work that way because it’s managed on behalf of all able account holders to get to pick a portfolio.
But that’s an excellent question. Yes.
Kelly Nelson: And we also have an independent, um, investment, um, in, in, in, in, I’m sorry, independent investment firm that. also looks at those investments to make sure that they’re being managed wisely. How’s Vanguard doing? And they take a look at that. Then we also have our own internal financial investment team for the [00:30:00] state treasurer’s office.
That’s another pair of eyes on those investments.
Kelly Nelson: Obviously they’re, they’re more on the conservative side rather than being a really high roller, um, high risk stocks. There’s portfolios are intended to, to have the earnings, but also You know, understanding that we don’t want to put it in very too, too risky of an option, right?
Right.
Frances Shefter: Now that makes sense. So, I mean, it’s just, it’s because all levels, like my father was amazing with it and do that. I, you know what, here’s the money, put it in the stock market, manage it. I’m good. I don’t have time for it. You know, I got too much other stuff going on here and as a special needs parent, you have even that much more.
So I like that I don’t have to have that option. Like I don’t have to think about it. It’s done.
Kelly Nelson: I totally agree with you, Frances. I feel the same way. I’m just happy that somebody has looked at that, put that portfolio together for me and, and again, that you’re there, your choice or the family member’s choice is to choose which one of those investment strategies that works best for them.
And we’ve given [00:31:00] them options. So. That’s, that’s great.
Kelly Nelson: And again, remember all earnings tax free federal state, no taxes paid on earnings. On earnings in the ABLE account. Yes, on earnings in the ABLE account. So that’s even better. Yeah, there, there’s tax advantages for that. So they do not pay taxes. Um, as long as when they take that money out, they’re using it for the beneficiary.
Frances Shefter: And there’s no restrictions on how using it for the beneficiary.
Kelly Nelson: There is, there is no like amount of money that you, you know, it’s not like you can only take out 200 or 500 or you have to wait for a certain age. No, you can access the funds whenever you want because ABLE accounts are online, a bank account.
They’re actually an online account that’s linked to an existing bank account. So you have access.
So you can take a withdrawal when you get up in the middle of the night and go, Oh my gosh, I forgot. I had to, it’s time to send those fees in for the summer program. Oh my gosh. And make that, make that transfer and, and take care of that whenever you want [00:32:00] to.
Frances Shefter: Yeah. That is amazing. I’m just like, Whoa, Um, I’m just thinking about like, I need to go home and talk to my husband about which way you want to go.
Frances Shefter: Well, and then the other thing that comes to my mind is that, you know, a lot of people have financial advisors. Um, and I guess I don’t, I mean, I know a few, I don’t know their knowledge, but I think the importance here for us that have neurodiverse kids is to make sure if we’re getting a financial advisor, to make sure the financial advisor understands All these differences because, you know what, they might say, you know what, the ABLE account doesn’t make sense for you, a Roth account makes sense for you right now, or this, you know, like, they know that stuff, the finances of what, because they need to know the ins and outs.
of everything.
Kelly Nelson: Um, yes. Yeah.
Kelly Nelson: And I would add, yeah, I would add to that when you’re, when you’re working with your financial advisor, make sure they know about ABLE accounts, because remember right now it may not be a big deal because your [00:33:00] child doesn’t receive SSI benefits, but if they have a Roth IRA or if some other kind of retirement account, that is a countable resource.
by social security and a lot for a lot of other waivers. But money inside of that ABLE account, that’s where that asset protection comes in. It’s like they can’t count those funds. And even as you think of people with disabilities that are, say, working and their employer wants to put money in, match them in a, in a 401k, they can definitely do that if they want.
The better option is to ask the employer to put the money into an Enable account because that’s another way for people to save and for retirement, but not jeopardize those benefits.
Frances Shefter: And I’m assuming for FAFSA, it doesn’t impact. It does not. It cannot
Kelly Nelson: be counted. Yeah, it’s not a countable resource, which is great.
Yeah.
Frances Shefter: Yeah, that’s another thing that’s important. And that’s the thing. And it’s not like you’re trying to game the system or anything like that, because that’s not what it’s about, but it’s about investing your money wisely to, you know, we all worked hard for our money. Like, we want to [00:34:00] invest it the way we don’t want to Take away from and like the thing I know a lot of people are like, well, you can afford it though You shouldn’t be getting SSI But it’s like it has nothing to do with that The reality is it’s not like SSI if I get it that person down the street doesn’t get it It’s not like a finite number, right?
And so if you in qualify then qualify and you should get it no matter what it doesn’t Everybody can get it if they qualify. It’s not a if if if you know, Oh, well, a hundred people got it. Can’t do anybody else. Right.
Kelly Nelson: Right. As long as they meet that eligibility criteria, they, they can, um, they can apply for it.
I also know that I’ve talked to so many families that it’s taken so long for them to be able to receive those benefits that their family member was eligible for sometimes two, three years before it comes through. So once somebody has been through that experience and it is intense and it is time consuming.
We want to make sure we don’t ever do anything that’s going to cause them to lose [00:35:00] those benefits, right?
Frances Shefter: So
Kelly Nelson: that’s why having an asset protection account, and there’s only two ways, again, able accounts and special needs trusts are a way to have money in those accounts and not have account as resources against them.
So, um,
Frances Shefter: yeah, that’s so awesome. It’s so cool. So there’s no restrictions on funding. You can earn money. I’m like, I’m trying to think of like, why wouldn’t you do an able account, you know? Um, Other than if you don’t have the money to, but like, if you have the money, it just makes sense to me. Like, and you have a child with a disability because it’s just, they have to have a disability.
It doesn’t have to be, wow. I’m just thinking about like, yeah, my brain’s going all over the place. Like family members and like clients.
Kelly Nelson: I think the other thing that’s good to know is like one of the things that we have is our features and we have some really cool features here in Maryland. One of them being a gifting page, which I love that.
And I love sharing this information. Remember I said we had a little over 6, 228 or something at Maryland [00:36:00] ABLE account holders right now. So 582 of those account holders activate, activated their gifting page and are actively using it throughout the year. And over the last six years, are you ready for this?
Those 582 people have received over $4.8 million in gifts. It is something that family and friends can really get behind, um, because they want to support a family member or a friend with a disability in their savings goals. And sometimes I see this used for really hardship situations. I think back on my, my own situation when my daughter was born 20 years ago, ABLE accounts did not exist.
She was in intensive care for over 101 days straight. People were calling saying, what can I do? What can I do? What can I do? And even when she came home, I mean, we had so many medical expenses, you know, and we didn’t receive any benefits. We’re just a regular, you know, mom and dad employed situation. We got, we got no benefits.
So I would have been able to [00:37:00] say, Hey guys, you know, we’re, we’re talking 400 a month in oxygen rentals alone. If you’d be interested in making a contribution to help pay for her oxygen, or there’s so many things we had to rent back then and Joe. I know my family and friends would have helped us out rather than have us experience the devastating financial impact we did from seven years worth of intense medical stuff.
So sometimes I see these gifting pages used for super fun things like, um, you know, I’m a special Olympics athlete. We made it to regionals. I want to go and the night in a hotel and, you know, they do it for that. I see people that want to get their first car or, um, you know, maybe, uh, go to a special camp.
I know some of these camps can be well. Cost higher because they have, you know, one on one attend, you know, help. And so there’s a lot of different ways that people use it. People that want to move out into their first apartment, they need to help furnish it. You know, there’s so many [00:38:00] ways and people can just very easily just through a link on their text message, their email, or a messenger, get a link to the gifting page, click on it.
How much? Boom. It goes right into the ABLE account. Never passes through a regular account that can be counted as an asset. So really good stuff. And
Frances Shefter: then if any of your family lives in the state that you have the account, they’re going to get a tax write off.
Kelly Nelson: They do. On top of it. They can take it as an income subtraction.
So it’s, you know, really, really good.
Kelly Nelson: And another benefit is let’s just say mom and dad opened a 529 college savings account when their child was a baby and they’re, you know, they’re getting close to transitioning out of high school and maybe. Maybe that, that student’s pathway is not college. Maybe they want to get a, uh, you know, a certification for a certain skill or something.
Pathway is not college at this point. They can roll those funds over from a 529 account into an ABLE account. And now it is expanded how [00:39:00] that fund, those funds can be used, which was Formally earmarked only for education, college tuition books, right now they can put it into able and they can use it for anything that supports that person in his health, independence or quality of life.
And let’s just say maybe six years down the road, they decide, you know what? I do want to go to college. Guess what? They can use able funds to pay for. College tuition, room and board books, everything. So it just gives them more flexibility.
Frances Shefter: Right. And I mean, I, and it’s funny, cause like, I’m just thinking about people that I interact with in the, in the community and how, well, I don’t want to do a 529 college because what if my kid doesn’t decide to go to college, then what happens?
Well, now it turns into an ABLE account and you’re not losing anything, you know? So like, if you have a 529 and you’re like, ah, my kid’s not going to, you know, or whatever. Here’s something to think about, like of, that’s so like, it’s amazing. Like, it’s just, [00:40:00] I don’t know where I’m going right now, but it warms my heart that like, legislation is doing something for our kids, you know?
And, and they’ve, they’ve put it out there as bad as some of the other laws might be and rules might be with, uh, with IDEA and they’re still there, you know? Right. But it’s like that they are at least trying to do something to help us help our kids.
Kelly Nelson: Absolutely.
Kelly Nelson: And I think about the journey to the passing of the ABLE, uh, the ABLE Act.
It really all started with just one dad, Steven Beck. Steven Beck was his name. And he was like, look, I’ve got two daughters, one I’m saving for, for, you know, in their college savings plan. I can do this. I can save for their future. My daughter with down syndrome cannot save for her. I can’t do it because she can’t have any assets over 2000.
So it started with a conversation. That conversation grew and grew and more parents and self advocates and then service provider agencies and disability advocacy groups. And this it took. Um, probably a [00:41:00] decade before it actually reached, um, the point where it was signed into law. But finally we have it and it is a game changer, breaking that cycle of poverty for people who were just spending down money so that they wouldn’t lose benefits now can save that money for what they need and need for their future or what their goals and dreams are.
So it’s a game changer.
Frances Shefter: Yeah, and, you know, I hear people saying, well, if you’re spending down money, then you don’t need the money, but, you know, what you just said, what you went through with your child of 700 a month, you know, like getting that paid for, like, if you have to spend down $1,000, In two months, you’ve already, you know what I mean?
Like, like, I always hear people like, Oh, you’re just trying to game the system and get something for nothing and all that other stuff. But that’s not what it’s about. It’s about having the extra resources to care for our kids. It’s not, it’s not like, Oh, great. Now I can go on a Disney cruise. Cause I have SSI, you [00:42:00] know?
Kelly Nelson: And I think of, you know, a lot of, um, parents that I’ve talked to across the state, I think the worst call I ever received was from a couple that were. Probably in their 80s and their son was in his 50s and, um, he was receiving SSI benefits and he had, you know, some, um, receiving residential services while parents were both ill and in the hospital, weren’t paying attention.
His regular checking account went over $2,000 for a period of time. He lost everything, lost his housing, lost his benefits, lost everything. And then you think, how can this happen? And the dad was literally crying on the phone and saying, of
Frances Shefter: course,
Kelly Nelson: why didn’t anybody tell me about an ABLE account? I wouldn’t have known that I would have just put the money, the extra money from social security in an ABLE account.
They’re dealing with an end of life situation. They’re not going to be here. That ABLE account money could be in that account for their son’s use to supplement. I mean, even if a [00:43:00] person is receiving the maximum amount of SSI benefits, 934, I think this year I could be off of that amount. Guys, is that enough to pay for rent, utilities, groceries?
I would like to know where in Maryland someone could live. on 900 a month for all their expenses. And that’s what social security maximum amount is. So they need to be able to save for things like dental, like that spend down we were talking about. People are like, Oh my gosh, I got to spend this money down.
Only three months later, they need a major root canal. Oh, no dental insurance. Now they don’t have money to pay for it because they spent it down. So they wouldn’t lose. their critical benefits. So it’s really sad.
Frances Shefter: It is. God. Wow. It’s just, it’s blowing my mind. I’m so glad I had you on. I’m so, and I’m sure like friends and family and clients that are listening and watching are going like, Oh, thank you.
You know, you might have an influx of calls in the [00:44:00] next couple of weeks. Um, so if you want to open, yeah.
Frances Shefter: So if you want to open an ABLE account, um, you know, for any of our listeners, what do they do? Who do they contact? What’s the best? route or the easiest.
Kelly Nelson: Absolutely. So we recommend if you’re interested in having a Maryland ABLE account that you actually type in www.
marylandable. org and then it’ll take you to our website. You’ll see our program disclosure book there. If you want to go into more of the nitty gritty of any of the investments or anything like that, that’s all in there. There’s a frequently asked section there. But at any time that you’re ready to open an ABLE account, you click on a little button at the top of the screen that says, Let’s Go.
Let’s open an ABLE account now. And it walks the family through the enrollment process. Um, so that’s pretty simple. It takes about 15 minutes to do it. Um, they are again, online accounts. So you’re going to be linking your ABLE account With an existing checking or savings account, any bank account of your choice.[00:45:00]
I think it depends on like which one works best for you. So
Frances Shefter: question, I guess, if we, if I already had, like if somebody already has a savings account for their child, cause they’ve been saving, they didn’t know about ABLE, can be kind of like that money be converted into the ABLE account?
Kelly Nelson: Yeah. So you could link, let’s just use that example.
Someone has a savings account for their child. When you open the ABLE account, but you can link that savings account. To the ABLE account and you can take transfer. You can make a transfer in to the ABLE account as much as you want. At any time you want to get the money out of ABLE, you click transfer, hit withdrawal, it goes back to that linked bank account and you can access those funds.
So that’s, that’s the way you get money in and out of an ABLE account.
Frances Shefter: Got it. So then just double check with your bank and make sure you keep your minimum in that bank account. Right. Right. Yeah. So yeah, we, we see
Kelly Nelson: people that, you know, link it to like a checking account. Um, uh, that’s what worked [00:46:00] best for me and my husband when we first opened our daughter’s ABLE account, she was 14 or 15 I think.
She didn’t have a job. She didn’t have any benefits. I mean, she doesn’t have really any money to be putting into it. So we linked it with our regular family checking account and that’s how we get money in and out. Yeah. Now. I hope that one day my daughter gets a job, one day she’ll have a, I hope she has a job and a bank account.
We can also link her bank account to the ABLE account and that way any money she wants to put into her ABLE account just gets electronically moved from her checking or savings into ABLE.
Frances Shefter: Can you do it to more than one account or no?
Kelly Nelson: Yes, as long as the accounts that you’re linking belong to either the account owner, beneficiary, or the person that’s the ALR.
Frances Shefter: Got it. Okay, that makes sense. So
Kelly Nelson: grandma cannot link her account. Got it.
Frances Shefter: Okay.
Kelly Nelson: The ABLE account, but grandma can get the gift page and anytime she wants to make a contribution, she clicks on the gifting page link and [00:47:00] she can make
Frances Shefter: a contribution. That is awesome to know. I’m so excited. I can’t wait to get this out there.
And I know my social media person is going to blast this like crazy. It might even be one of a, of a boost because it’s just, I think it’s just such an important tool for everybody to know about. And I know from being in the community and talking to other parents, people don’t know about this.
Kelly Nelson: know, they don’t.
And yo we’re, we’re running out to mention one thing.
Kelly Nelson: Tha features is with the able an option to have an able looks like a regular visa of credit. It’s actually linked to your able accou transfer funds from able Now, the reason I love this is because I, like I said, I have a 20 year old daughter. I got her the card about four years ago.
It has been the most wonderful financial literacy tool for her because let’s face it guys. Budgeting, saving, [00:48:00] spending money itself is very abstract, especially in a world where we don’t actually hold dollars in our hands that much, right? It’s all very abstract. So this has taught her so much when I gave her the card, she was so excited.
She said, can I get my phone? I want to take a picture of it and send it to my friends. Lesson number one. No, she didn’t know not to do that, but why would she? She’s 16 year olds, you’re old, didn’t have a card. So we talked about how this is important. you know, bank account, you know, give it to other people, whatever.
But then I put money on that account. She’s not able to access all of the funds in her ABLE account, only what’s loaded on that card. And we began practicing saving some spending some, she goes on her CBI community based instruction classes with her, you know, program at school. She takes her card with her, but I’ve also linked it to.
Life expenses that cell phone bill T Mobile. So all of a sudden she’s like, wait a minute Why did this money come off of my card? Well, Lily, that’s because you have to pay [00:49:00] every month for that phone and people are like, well, of course But she didn’t know that right? I’m trying to teach her about living expenses So it’s been just a wonderful tool and it is an option for families who are interested in that
Frances Shefter: Oh, that is so amazing.
Frances Shefter: Yeah, just I mean like I’m like, okay everybody now go get your ABLE account And I’m assuming if you’re in a different state state, it’s probably their state, able. org or just Google your state able and I’m sure you’ll find it. I’m glad you said Google
Kelly Nelson: because when, if I want to shout, just say one little word of warning.
If you Google Maryland able, what is likely to pop up is something that says able now. in Maryland. And a lot of people are clicking on that link. That is able now that’s a Virginia account, which is wonderful. If you want to be with Virginia, that’s fantastic, but know that you’re being, you’re going to sign up for Virginia because your contributions as a Maryland resident are not going to have any ability to be taken off of your income taxes.
So they, they, they have named it able now so that, you [00:50:00] People know that it’s open for national enrollment and that’s what pops up. If you pop, if you put in there, Tennessee able, it would say able now in Tennessee. So just a word of warning, type in our URL, www. marylandable. org. If you want to be with Maryland.
Got
Frances Shefter: it. That makes sense. That is so awesome. Thank you so much. This has been just, I mean, This is like gold. I, you know, like I, I don’t even know how to put a price on it. This has been so amazing for me personally. I know for family, it’s for friends, for potential clients. Um, this is just like, I would have to say probably now one of my favorite episodes, cause I think I, I just, in the sense of like, that everybody needs to know this, you know, others are just more tailored to certain type of people, but this is one that no matter what your diagnosis is.
This is something you need to know. So thank you so much for being on the show and sharing your wealth of information.
Kelly Nelson: Thanks, Frances. It was a pleasure.
Voiceover: You’ve been [00:51:00] listening to Stress-Free IEP® with your host, Frances Shefter. Remember, you do not need to do it all alone. You can reach Frances through Shefterlaw.com where prior episodes are also posted. Thank you for your positive reviews, comments, and sharing the show with others through YouTube, LinkedIn, Apple Podcasts, Spotify, Google Podcasts, and more.
A Comprehensive Guide to ABLE Accounts with Kelly Nelson
Stress-Free IEP® with Frances Shefter, Episode 54
In this episode of Stress-Free IEP®, Frances Shefter interviews Kelly Nelson, Outreach and Communications Manager for Maryland ABLE. Kelly is passionate about promoting personal choice, independence, and economic stability for individuals with disabilities through ABLE accounts. Through her dedication and expertise, Kelly strives to empower individuals and families to achieve their goals of independence and financial security.
Tune in to the episode to hear about:
Learn more about Kelly Nelson:
Watch the previous Stress-Free IEP® episode with estate planning attorney Todd Boerstein where Frances and he discuss special needs trusts: https://shefterlaw.com/2022/11/stress-free-iep-with-frances-shefter-and-todd-boernstein-video-podcast
Read the whole transcript from this episode below.
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Stress-Free IEP®:
Frances Shefter is an Education Attorney and Advocate who is committed to helping her clients have a Stress-Free IEP® experience. In each podcast, Frances interviews inspiring people to share information, educate you, empower you and help you get the knowledge you need.
Watch more episodes of Stress-Free IEP®:
Connect and learn more from your host, Frances Shefter:
Read the whole transcript here:
Voiceover: Welcome to Stress-Free IEP® You do not need to do it all alone. With your host, Frances Shefter, Principal of Shefter Law. You can get more details and catch prior episodes at www. Shefterlaw. com. The Stress-Free IEP®video podcast is also posted on YouTube and LinkedIn, and you can listen to episodes through Apple podcasts, Spotify, Google podcasts, Stitcher, and more. Now, here’s the host of Stress-Free IEP®, Frances Shefter. Hello everyone and welcome to the show.
Frances Shefter: I am so overly double, like, excited about today’s show because we are learning about ABLE accounts. And I know all of you out there listeners are like, well, wait, what’s an ABLE account? What’s a special needs trust?
Those are questions I get all the time. So I was so [00:01:00] excited to meet Kelly Nelson from Maryland ABLE, um, and that she agreed to come on the show to talk to us about what ABLE accounts are and how they can be helpful. So Kelly, take a minute, introduce yourself a little bit and let’s get right into about what ABLE accounts are.
Kelly Nelson: Awesome. Thanks so much, Frances. I really appreciate being invited to be on the show with you today. I’m Kelly Nelson. I’m the outreach and communications manager for the Maryland ABLE program. And I always like to share with people that in addition. To working with Maryland able or for Maryland able. I’m also a parent of a 20 year old young lady with multiple disabilities. Who’s had an able account herself, um, for the last five years. And I have had this unique opportunity to have some. extra practical life experience and helping her to manage the account. And it’s just really given me an opportunity to see how it’s helped her to grow in her self confidence and her [00:02:00] independence, as well as I learned some really important financial literacy skills. And also given her father and I a way to be able to plan and prepare for the future. So I always like to, to share that I’ve had that opportunity and I think it really has helped me as I’ve been able to connect with students and other older people with disabilities and family members throughout the state of Maryland, just helping them to, um, access that information about how ABLE accounts can help them.
Frances Shefter: That is so great. I love, I talk about my kids also all the time, um, and it’s important, especially when we’re here in the neurodiverse community and giving information, being a parent, um, is just such a different level, being a parent of a, of a neurodiverse child, no matter what the disability is, no matter how severe, minor, whatever, it’s, we all get it, you know, and it’s, it’s something you can’t explain until you live it, right? Agreed. And it’s just such a different coming from another parent that’s living it is so much [00:03:00] more helpful at least I find because You get me like you understand our stresses, our worries and all of that.
Frances Shefter: Um, so ABLE accounts, like what is it? Like, cause everybody always says, well, why would you do an ABLE account instead of a special needs trust?
So what is ABLE account and how is it different?
Kelly Nelson: Yeah. Well, ABLE accounts are a way for people with disabilities, students, um, with disabilities, their family members to be able to sign up. Save money or invest money tax free and also be able to do so without jeopardizing any of those critical federal and means tested benefits. Things such as SSI or Medicaid and various types of waivers. So the thing, um, about public benefits, while they’re helpful in so very many ways, there are some, um. Challenges to it. So a lot of people that qualify for say SSI benefits, they have an asset limit of just $2,000, meaning that they’re never permitted to be able to [00:04:00] have assets.
More than $2,000 without jeopardizing their, you know, SSI benefits, their, their Medicaid and different waivers. So, thanks to some federal legislation that was passed back in 2014, um, called the, uh, Stephen a back. Achieving a Better Life Experience Act, or the ABLE Act, as we call it. It gave people with disabilities and their families the ability to save beyond that 2, 000 and actually be able to have up to $100,000 in their ABLE account and still maintain all of their benefits.
So, it was a real game changer for them. for people as it really answered that question of, Hey, how do we save and plan for our future and have those dreams and those goals, but not being able to exceed $2,000, right? So that was creating that cycle of poverty for people with disabilities, as well as a real inequity for how parents or family members were trying to plan and prepare for the lives of their children. Children as they [00:05:00] grow into adulthood, and let’s face it. Eventually, most of us are going to find that our Children will probably be here after we’re gone at some point. So we want to be able to do some planning. So that’s where we see able accounts and special needs trust. very helpful collaborative planning tools
Frances Shefter: That’s great. I, for some reason, I thought that ABLE accounts did impact benefits. That’s great to know that they don’t, um, because that’s huge, but what, like what, I mean, I guess it’s, it has to be an ABLE account to not impact. Cause if you’re in a regular checking account, then it would impact. So that makes sense.
Like you have to get the special account, but like, what can anybody open an ABLE account? Like what, what would. allow somebody to be qualified for an ABLE account?
Kelly Nelson: Sure. So there’s two criteria basically, uh, that you have to meet in order to have an ABLE account. And the first is that a person has to have a disability that, um, occurred before their 26th [00:06:00] birthday.
And the second is that they have to have a disability that meets the Social Security Administration’s definition of a disability. So this is going to be something that is going to be present without, with the person throughout their lifetime and have a significant impact in either their ability to learn or maintain full time employment.
So it’s going to be a more significant disability. But when we talk about disability types, people say like, what though? Like what kind of disabilities? So that could be someone with blindness or low vision, someone who’s deaf, hard of hearing. It could be people with intellectual disabilities, developmental disabilities, autism, spina bifida.
I mean, there’s the range of disabilities is vast. It just is going to have to meet that social security definition. Meaning that it’s going to be present with them throughout their lifetime. So, anyone that goes, is interested in enrolling in an ABLE account, one of the first questions it always asks in that process is, are you currently receiving SSI benefits or SSDI benefits?[00:07:00]
Because that way, Social Security has already examined that documentation. They know that they have that, um, met that criteria. But for those who may be listening who have a family member that does not currently receive SSI or SSDI, that’s okay. As long as they’ve had that disability before age 26, they can just get a physician’s certification form signed and that would suffice.
Frances Shefter: So, okay, so then when you say meets the definition, it’s not You don’t have to qualify for SSI. You just have to meet the definition, meaning how, like, like what level, like, so, you know, autism, for example, ASD, you know, we have kids, it’s a spectrum disorder, we have kids that are going to be 100 percent functioning in society, you know, like no issues, adult, college, own homes.
All of that other stuff. And then we have the kids on the other end of the spectrum that are more challenged and most likely will never live [00:08:00] independently. So can both qualify or is there a restriction somewhere in there?
Kelly Nelson: The, the, as long as they, even if they’re not qualified, even if they’re not receiving SSI benefits, if they can show that they have a diagnosis of autism.
then, um, they’re, they’re able to enroll for an ABLE account. And sometimes, you know, I think when we think of families that we’re working with, with younger children, a lot of times, they’re not currently receiving SSI benefits because if they, for example, my daughter, she was born, um, with multiple disabilities.
She certainly had disabilities that are going to be with her throughout her lifetime, but had we applied for SSI benefits when she was younger, She would have been denied because Social Security examines the entire family’s income. Mom and dad, if they’re working, most likely their income is going to exceed that income threshold and they don’t qualify.
But when that individual turns 18, that’s when we see people applying for SSI and Social Security’s just looking at that one person’s income. And that’s when we see [00:09:00] that they’re usually eligible to receive SSI benefits. So, that’s
Frances Shefter: Got it. And then what happens if you, let’s say you qualify, like, is it you qualify, you open the ABLE account, that’s it, you have it, like, you don’t have to re qualify?
Kelly Nelson: There is no, um, redetermination. Yeah, you just, you, um, in the enrollment process, uh, there’s a self attestation that you have a disability that meets that before age 26 criteria. And, um, yeah, and then you don’t have to, Go up for any re enrollments or, you know, re certifications.
Frances Shefter: Because I’m thinking, I’m thinking of our kids on the spectrum. That’s a lot of my, there’s like, you know, ADHD, Autism Spectrum, um, is where my focus is and, uh, and anxiety because all three are comorbid pretty much, you know, they overlap so much. Um, but, um, like for the kids that we know we’re going to go to college and all of that other stuff, but parents want to provide for them in a way, just, you know, it’s, [00:10:00] I guess, another way to technically save for your child.
Like why? Like somebody that has money to leave for their kids. Like, why would an ABLE account make more sense even if they don’t qualify for SSI anyway? Does that make sense?
Kelly Nelson: Well, there’s tax advantages to having an ABLE account. For example, any money that is saved or invested in the ABLE account is tax free.
You don’t pay federal or state taxes on those earnings. And there’s no penalty for taking those, to taking withdrawals on the account, provided that The money is being utilized for the beneficiary of the account. So there’s tax advantages that way. There’s also the tax advantages of family and friends that are contributing to enable account.
For example, um, money that my husband and I are saving and investing for our daughter’s future. We get an income deduction or an income subtraction on our Maryland state taxes. And then we turn around and we’re using the funds in that ABLE account to pay for everything that our daughter needs and that [00:11:00] we were paying for anyway, you know, her braces, um, summer camps and things like that.
And we’re able to take advantage of an income deduction. And that is true. Um, for families that are just planning on saving or investing. They’re able to actually, um, subtract up to 2, 500 per person per ABLE account. So if mom and dad are married and filing joint returns, they can claim 5, 000 of that, of those contributions as an income subtraction.
Like, that’s huge.
Frances Shefter: Like, now I’m thinking, like, why wouldn’t, why wouldn’t any, everybody have an ABLE account, basically, you know? And then, like, for, for example, like, let’s say, um, there’s somebody, you know, has the Maryland ABLE account. I’m assuming you have to be a resident of Maryland.
Kelly Nelson: Maryland is one of 47 able programs nationwide. Many of those programs are open for national enrollment as is Maryland. So we currently have, I think, 6, 228, uh, Maryland able account [00:12:00] holders. The majority of them are Maryland residents, but we do have, um, a couple of hundred that are. in another state for whatever reason they chose Maryland able or maybe they lived here at one time and they relocated to another state and they’re able to either keep variable account with Maryland or roll it over to the state that they live in provided they have an able account.
Frances Shefter: So would the person putting money in need to be a Maryland resident to get the deduction or is that part of the national?
Kelly Nelson: Well, the good news is that anybody can contribute to an ABLE account. So grandma who lives in Florida, she can contribute to someone’s ABLE account, right? But since she doesn’t pay Maryland state taxes, that tax, you know, some, it doesn’t really apply to her because she doesn’t pay Maryland taxes.
So she would probably pay maybe Florida income taxes or something, but we don’t, um, the Maryland ABLE. program does not provide an income deduction for other, for [00:13:00] other people’s, other states, um, taxes.
Frances Shefter: So then, of course, my brain is going to, okay, so if grandma wants to put 1, 000 in the ABLE account, grandma gives the 1, 000 to mom and dad, mom and dad put it in the ABLE account, so mom and dad can get the tax deduction and grandma’s still done what she wants to do.
Kelly Nelson: Yeah, absolutely. Grandma can contribute money to the parents if she wants and, and they could, you know, um, handle, have that contribution however they want. There’s, um, I guess flexibility on that, but certainly, you know, that was one of the things when I first heard about ABLE, um, you know, my daughter had an extraordinary medical journey when she was first born, um, for many, many years, actually, that really kind of put us back financially for a long time.
So I thought, Oh gosh, you know, I don’t even think I have any extra money to put it in ABLE account for her right now. But then I got to thinking about it. I said, you know, We’re her parents. We’re providing for all of her needs anyway. That’s what parents do. I may as well take some of that money that I know I’m going to spend [00:14:00] anyway, put it into the ABLE account and turn around and use it for things that she needs.
And then we get an income deduction on our taxes. So it really, it really made a lot of sense to me as a parent to do that.
Frances Shefter: Yeah, no, that makes sense. Cause I mean, that’s where my brain is going is like, why wouldn’t you do it? Cause again, you’re spending the money anyway. You might as well get the tax break.
Um, because as we all know, are in order to raise kids. Insurance doesn’t cover it or sometimes insurance might cover it, but it’s not exactly the quality you want or the timing you want or all of those other things. So we tend to go out of pocket because as parents, we do what we have to do for our kids, right?
We make it work. We figure out a way. Yeah. That’s so, wow. I’m just, I’m like mind blown because I’m so glad I have you on the show because for me personally, I mean, both my kids are neurodiverse. So now I’m like, oh. Okay. Wait a minute. Why haven’t we done that? Um, so like what, so like that’s the tax benefits and stuff, but like what, for example, like, I mean, instead of a 529 or like [00:15:00] for college or something like that, are there any restrictions on the ABLE account of withdrawing and what you can use it for?
Kelly Nelson: Well, that’s the wonderful thing about the ABLE accounts is, you know, our actual regulations, um, Are held within the Internal Revenue Code. We’re section 529A. If you’re ever suffering from insomnia and want to read those regs, you can check it out. But we’re actually sort of sisters in the law, um, next to 529.
So there’s 529 College Savings. You guys have heard of those. We’re 529 a cause there’s some parodies there as well as some differences. But what the regulations say is that able funds, sure. They’re intended for saving and investing, but you can access the funds at any time. There’s no penalty for early withdrawal.
There’s no withdrawal fees. If you’re using the money, you know, for the beneficiaries, um, health, independence, or quality of life. So I think, um, you know, it’s, it’s just advantageous because, um, If you’re saving in [00:16:00] a regular. 401k or savings account or even 529, if that person with the 529 is the owner of that account, they’re all countable resources.
So again, for someone who’s not receiving SSI benefits, it really doesn’t matter as much. But for those of us who have kids that are going to be recipients of those SSI benefits, We really need to make sure as we move forward in our planning that we don’t have money in their own name And this includes by the way people that are going to be leaving money to them in their future I wish I had a dollar for every time.
I got a phone call from someone who said Oh my gosh, I didn’t realize that you know, great uncle Bernie, he passed away and bless his heart. He left my son, you know, $20,000 of his life insurance. And it’s now we’re over resourced. We’re going to lose our benefits. What can we do? Right? So that’s where we look at having those ways to be able to save for larger amounts as well.
It’s important [00:17:00] to know with an ABLE account. people can contribute up to 18, 000 per calendar year. The balance can continue to grow, but every year there’s, there’s that 18, 000 contribution limit. So let’s take uncle Bernie, for example, bless his heart, left $20,000. Um, you could only put 18 of that amount, if that amount into the able account.
So that’s where we see a need for multiple Planning tools for families.
Kelly Nelson: A lot of times we see people, see people have both ABLE accounts and special needs trust because with a special needs trust, and there’s three different kinds, but there is no limit on how much money you can contribute to enable, I’m sorry, to a special needs trust.
You could fund it with a dollar. You could fund it with 25 billion if you could, right? So that’s the big difference where we see those larger amounts needing to have a place to You know, to be received and maintained
Frances Shefter: and on special needs trust. Just want to let our listeners know if you look [00:18:00] back and we’ll probably put the link in the show notes.
I interviewed Todd Bornstein, who’s an estate planning attorney, um, who explained special needs trust so that you could learn the other side, the other tools as well. I mean, like this is such a huge thing because again, there’s so much out there for parents that you don’t even know, you know, like I knew there were able accounts.
I knew, okay, that might be something I don’t want to consider in the future. But not like really dug in and had the time to figure it out. And that’s like, I’m so excited. Cause that’s part of the reason of my podcast is, Hey, parents, check it out. There’s this, or there’s that. And as a podcast, you can listen to it while you’re driving, while you’re doing the dishes, while you’re trying to sleep.
What, you know, whatever it is that it’s consumable information in an easy digestible way. Um, so you were saying, so owner of the account. So the person with a disability is the beneficiary.
Kelly Nelson: Actually, that’s a little, that’s a little different as well with ABLE accounts. It’s always the person with the disability that is both the [00:19:00] owner of the account and the beneficiary.
Now, we realize when we’re talking about children or someone under the age of 18, someone has to be on that ABLE account with them. It could be mom or dad or grandparent, whoever is the, is the caregiver, right? But the account is always owned by the person with the disability and the person that may be helping them manage the account.
In ABLE space, we call that the authorized legal representative or the ALR. That’s just our words for, hey, who can help open and manage that ABLE account on their behalf. And when the child is say 18 and they’re an adult, and if they’re able to manage the ABLE account on their own, fantastic. They’re able to do that.
We just complete a remove ALR form and the person’s ready to rock and roll and manage their own account. Sometimes we see. You know, some of our, our family members that even when they’re an adult, they need help managing financial accounts. Some, some people say, you know, mom, I know I can do it, but I’d like for you to [00:20:00] continue to help me manage this account.
So they’re able to do that if they want to. And certainly we sometimes meet people that have family members that are unable to provide consent for various reasons. In that case, we have, we see family members that have either guardianship or maybe power of attorney, but anyone that is a family member, even if they don’t have guardianship at the time, and this is a new, uh, change to our regulations within the last year.
If they don’t have guardianship for an adult and they are a family member, it could be a spouse, a parent, a sibling, a grandparent, or someone serving as rep payee, they can also help them to open and manage that legal account.
Frances Shefter: So my brain goes into the, okay, we have our kid that’s, that’s not adverse, but is going to live independently.
Um, mom, dad, grandpa, aunt, uncle been contributing. You know, we’ve got a nice big account of a hundred thousand dollars [00:21:00] we’re, you know, like, cause we’re maxing out. Um, when that child turns 18 and technically they’re able to manage the account on their own. Can they come in and be like, bye mom or dad, whoever’s on it, it’s mine now and take all the money.
Kelly Nelson: Technically, the person that owns the ABLE account always has access to the funds. Um, so if they wanted to remove their parents, if they wanted, you know, to have their parents removed as the ALR, then they can manage that account. They can do with it what they want. So sometimes we see, um, adults that parents don’t have guardianship, but rather they have POA over financial matters because there are some complexities to that and they need some help.
So if a parent has a POA to manage their finances, then they could provide that and just say, you know, I’m given POA and I’m going to help with this account. But I think the important thing to know is that we have just [00:22:00] as you know, every, every person is unique. All ABLE account owners are also unique. We have people with disabilities that may have CP and when they’re an adult, they, they They can manage that account themselves.
And we want, we believe that, you know, people with disabilities should be involved in managing their own finances to the, to the best of their ability. So what’s nice about an ABLE account, especially for an individual with a disability who is able to manage, it’s different in a special needs trust because you can have a special needs trust, but that person never has direct access to those funds, uh, for, you know, they have to have, go through a trustee.
So with an ABLE account, A person with a disability who is able to manage it can access those funds. And that’s why they’re really good collaborative planning tools. They’re not in competition with one another. A lot of times people start with ABLE accounts because, you know, um, with special needs trust.
They’re, they’re fantastic finance, you know, [00:23:00] very finely nuanced products, but they take a long time to develop because the parents have a lot of work to do. And I know, cause I also have one of those as well. It took us several months in that planning process. Enable account you can open in 15 minutes.
There’s also a difference in the cost of having these two different accounts that the 35. It’s billed quarterly. So, you know, that was much more affordable than what we. paid for our special needs trust, which range in cost between 1000, 2000 up to 14, 15, 000, depending upon how, how much planning goes into that process.
So, and they’re both equally valuable, but I think there’s also some differences as well as who can, you know, I want, I want, I hope that my daughter, um, I don’t know what. How things are going to go farther down the road, but I’m trying to include her in an understanding about finances. So I want her to have some access.
Whereas money that’s in her trust, she will not be able to [00:24:00] access directly. They’ll always be a trustee and
Frances Shefter: that makes sense. I’m just thinking along the lines of like an 18 year old just graduated high school and like, Oh my God. I got $50 grand, let me go buy a $20,000 car, you know, like might not be spending it as wisely as the parents would want.
Right.
Kelly Nelson: And that’s part of that, you know, that, uh, you know, financial literacy process that we go through as parents. Cause that could happen if they didn’t have a disability and somebody had money in an account for
Frances Shefter: that. You know, that’s,
Kelly Nelson: that happens too, but definitely I understand. I mean, I know that we work really hard to be able to save and plan for our daughter’s future.
I would not. be very happy if she decided to take all of her money out and buy, you know, maybe thousand dollar vehicle or something like that. I agree.
Frances Shefter: Right. So we’re working on that. Yeah. But I guess that’s the thing is to, to think about. And then the parents, I’m just also thinking about the people in the higher tax bracket of what and how, um, you know, I [00:25:00] should say higher, but like, you know, the, that might have the hundred thousand dollars to, you know, put somewhere or something.
Um, but yeah, it makes sense. You kept saying about investing. So like, what does that look like with investing with an ABLE account? Oh
Kelly Nelson: yeah, great.
Kelly Nelson: So here in Maryland, we have, we have some options when people have an ABLE account, it’s an asset protected account, meaning social security and other, and other federal or state means tested benefits cannot count those.
funds against them and when being eligible for their benefits. But we also offer either a cash savings option or four different investment options. So right now our cash savings option, that’s an FDIC insured up to $250,000. We’re currently, they’re paying like almost 6 percent interest. So it’s doing really well.
And a lot of our account holders like that because they’re saving their own money, especially, uh, people with disabilities that are working and contributing their own [00:26:00] funds from their job there, they’re really all about, Hey, I want to put this money in there. And I want it to be there next month when I come back.
Frances Shefter: and
Kelly Nelson: hopefully, you know, they are, they’re, they’re happy with their interest and stuff. Then there’s other folks like, like I think of parents that have a child that was born with down syndrome and they open their ABLE account when the child is just a couple of months old and they are really looking for just a long term investment product.
So they’re not really planning on accessing the funds that often for them. We have four different choices. These are Portfolios that are managed by Vanguard. Um, so they, there’s just one for everybody’s different, uh, risk levels and tolerances and how long they want to be in the investment. We have a, um, what we call the moderate, um, portfolio, which is 80 percent in bonds and just 20 percent or it’s actually called the conservative one, so it’s mostly in bonds with a little bit in the stock market.
Then we have another one that is a moderate, which is a 50, 50 split [00:27:00] between stocks and bonds. And then for people who are really looking for that long term investment, we have the aggressive option, which is, um, 86 percent in the stock market and 14 percent in bonds. So these are folks that are going to watch that rise and fall over decades, right?
They’re not going to be like, Oh my goodness, you have to have the risk free option. Tolerance for that. Right. But, um, and then we also have it a hundred percent in bonds. So we do have several different options. And the best part about this is for people that are listening, you’re like, Oh my gosh, like I’m a parent of a, with a child with special needs.
My life is complicated and everything. I don’t have time to think about like what’s investment portfolio. I don’t really know what to do. The great news is with ABLE, every single time you make a contribution to the ABLE account, you direct. Where you want that money to go. So let’s just say most of the time you’re putting it in the cash option because you know, and then in a couple of months you’re taking it out to pay for summer camp or something.
Um, but then sometimes you’re like, you know what, this time I want [00:28:00] to direct it towards that moderate investment option. And that’s, um, you know, they can, you can do that. And I love that flexibility.
Frances Shefter: That’s awesome. And then who manages? I’m thinking about my father. My father was, how he invested money was crazy.
Amazing. It worked, you know, but, but he, he wanted to manage like what stocks were bought and what, you know, and buying and selling and all of that. Who does that in the ABLE accounts?
Kelly Nelson: So with Maryland ABLE, you know, the, the, the ABLE program in Maryland is managed by, The state of Maryland underneath the state treasurer’s office, but we had to partner with financial institutions because the state is not a bank.
The state of Maryland is not a financial institution. So we have the bank of New York Mellon that holds all those cash assets. Um, forgot to mention that we’re up to almost 87 million in assets being managed by, um, you know, being saved by. People with disabilities who are at one time [00:29:00] told they could never have more than $2,000.
So I’m always proud of these savers and these investors that are putting that money in there. But anyway, so we have the bank of New York melon who holds that money in a giant trust. Um, and you know, it keeps the accounting of.
Kelly Nelson: Whose funds are enabled in each able account. We also partner with Vanguard.
That’s our investment manager. So what they’ve done is they’ve developed these portfolios, this mix. So somebody doesn’t get to call up and say, Hey, buy me like X number of Starbucks and Buy me X percentage of Amazon. It doesn’t really work that way because it’s managed on behalf of all able account holders to get to pick a portfolio.
But that’s an excellent question. Yes.
Kelly Nelson: And we also have an independent, um, investment, um, in, in, in, in, I’m sorry, independent investment firm that. also looks at those investments to make sure that they’re being managed wisely. How’s Vanguard doing? And they take a look at that. Then we also have our own internal financial investment team for the [00:30:00] state treasurer’s office.
That’s another pair of eyes on those investments.
Kelly Nelson: Obviously they’re, they’re more on the conservative side rather than being a really high roller, um, high risk stocks. There’s portfolios are intended to, to have the earnings, but also You know, understanding that we don’t want to put it in very too, too risky of an option, right?
Right.
Frances Shefter: Now that makes sense. So, I mean, it’s just, it’s because all levels, like my father was amazing with it and do that. I, you know what, here’s the money, put it in the stock market, manage it. I’m good. I don’t have time for it. You know, I got too much other stuff going on here and as a special needs parent, you have even that much more.
So I like that I don’t have to have that option. Like I don’t have to think about it. It’s done.
Kelly Nelson: I totally agree with you, Frances. I feel the same way. I’m just happy that somebody has looked at that, put that portfolio together for me and, and again, that you’re there, your choice or the family member’s choice is to choose which one of those investment strategies that works best for them.
And we’ve given [00:31:00] them options. So. That’s, that’s great.
Kelly Nelson: And again, remember all earnings tax free federal state, no taxes paid on earnings. On earnings in the ABLE account. Yes, on earnings in the ABLE account. So that’s even better. Yeah, there, there’s tax advantages for that. So they do not pay taxes. Um, as long as when they take that money out, they’re using it for the beneficiary.
Frances Shefter: And there’s no restrictions on how using it for the beneficiary.
Kelly Nelson: There is, there is no like amount of money that you, you know, it’s not like you can only take out 200 or 500 or you have to wait for a certain age. No, you can access the funds whenever you want because ABLE accounts are online, a bank account.
They’re actually an online account that’s linked to an existing bank account. So you have access.
So you can take a withdrawal when you get up in the middle of the night and go, Oh my gosh, I forgot. I had to, it’s time to send those fees in for the summer program. Oh my gosh. And make that, make that transfer and, and take care of that whenever you want [00:32:00] to.
Frances Shefter: Yeah. That is amazing. I’m just like, Whoa, Um, I’m just thinking about like, I need to go home and talk to my husband about which way you want to go.
Frances Shefter: Well, and then the other thing that comes to my mind is that, you know, a lot of people have financial advisors. Um, and I guess I don’t, I mean, I know a few, I don’t know their knowledge, but I think the importance here for us that have neurodiverse kids is to make sure if we’re getting a financial advisor, to make sure the financial advisor understands All these differences because, you know what, they might say, you know what, the ABLE account doesn’t make sense for you, a Roth account makes sense for you right now, or this, you know, like, they know that stuff, the finances of what, because they need to know the ins and outs.
of everything.
Kelly Nelson: Um, yes. Yeah.
Kelly Nelson: And I would add, yeah, I would add to that when you’re, when you’re working with your financial advisor, make sure they know about ABLE accounts, because remember right now it may not be a big deal because your [00:33:00] child doesn’t receive SSI benefits, but if they have a Roth IRA or if some other kind of retirement account, that is a countable resource.
by social security and a lot for a lot of other waivers. But money inside of that ABLE account, that’s where that asset protection comes in. It’s like they can’t count those funds. And even as you think of people with disabilities that are, say, working and their employer wants to put money in, match them in a, in a 401k, they can definitely do that if they want.
The better option is to ask the employer to put the money into an Enable account because that’s another way for people to save and for retirement, but not jeopardize those benefits.
Frances Shefter: And I’m assuming for FAFSA, it doesn’t impact. It does not. It cannot
Kelly Nelson: be counted. Yeah, it’s not a countable resource, which is great.
Yeah.
Frances Shefter: Yeah, that’s another thing that’s important. And that’s the thing. And it’s not like you’re trying to game the system or anything like that, because that’s not what it’s about, but it’s about investing your money wisely to, you know, we all worked hard for our money. Like, we want to [00:34:00] invest it the way we don’t want to Take away from and like the thing I know a lot of people are like, well, you can afford it though You shouldn’t be getting SSI But it’s like it has nothing to do with that The reality is it’s not like SSI if I get it that person down the street doesn’t get it It’s not like a finite number, right?
And so if you in qualify then qualify and you should get it no matter what it doesn’t Everybody can get it if they qualify. It’s not a if if if you know, Oh, well, a hundred people got it. Can’t do anybody else. Right.
Kelly Nelson: Right. As long as they meet that eligibility criteria, they, they can, um, they can apply for it.
I also know that I’ve talked to so many families that it’s taken so long for them to be able to receive those benefits that their family member was eligible for sometimes two, three years before it comes through. So once somebody has been through that experience and it is intense and it is time consuming.
We want to make sure we don’t ever do anything that’s going to cause them to lose [00:35:00] those benefits, right?
Frances Shefter: So
Kelly Nelson: that’s why having an asset protection account, and there’s only two ways, again, able accounts and special needs trusts are a way to have money in those accounts and not have account as resources against them.
So, um,
Frances Shefter: yeah, that’s so awesome. It’s so cool. So there’s no restrictions on funding. You can earn money. I’m like, I’m trying to think of like, why wouldn’t you do an able account, you know? Um, Other than if you don’t have the money to, but like, if you have the money, it just makes sense to me. Like, and you have a child with a disability because it’s just, they have to have a disability.
It doesn’t have to be, wow. I’m just thinking about like, yeah, my brain’s going all over the place. Like family members and like clients.
Kelly Nelson: I think the other thing that’s good to know is like one of the things that we have is our features and we have some really cool features here in Maryland. One of them being a gifting page, which I love that.
And I love sharing this information. Remember I said we had a little over 6, 228 or something at Maryland [00:36:00] ABLE account holders right now. So 582 of those account holders activate, activated their gifting page and are actively using it throughout the year. And over the last six years, are you ready for this?
Those 582 people have received over $4.8 million in gifts. It is something that family and friends can really get behind, um, because they want to support a family member or a friend with a disability in their savings goals. And sometimes I see this used for really hardship situations. I think back on my, my own situation when my daughter was born 20 years ago, ABLE accounts did not exist.
She was in intensive care for over 101 days straight. People were calling saying, what can I do? What can I do? What can I do? And even when she came home, I mean, we had so many medical expenses, you know, and we didn’t receive any benefits. We’re just a regular, you know, mom and dad employed situation. We got, we got no benefits.
So I would have been able to [00:37:00] say, Hey guys, you know, we’re, we’re talking 400 a month in oxygen rentals alone. If you’d be interested in making a contribution to help pay for her oxygen, or there’s so many things we had to rent back then and Joe. I know my family and friends would have helped us out rather than have us experience the devastating financial impact we did from seven years worth of intense medical stuff.
So sometimes I see these gifting pages used for super fun things like, um, you know, I’m a special Olympics athlete. We made it to regionals. I want to go and the night in a hotel and, you know, they do it for that. I see people that want to get their first car or, um, you know, maybe, uh, go to a special camp.
I know some of these camps can be well. Cost higher because they have, you know, one on one attend, you know, help. And so there’s a lot of different ways that people use it. People that want to move out into their first apartment, they need to help furnish it. You know, there’s so many [00:38:00] ways and people can just very easily just through a link on their text message, their email, or a messenger, get a link to the gifting page, click on it.
How much? Boom. It goes right into the ABLE account. Never passes through a regular account that can be counted as an asset. So really good stuff. And
Frances Shefter: then if any of your family lives in the state that you have the account, they’re going to get a tax write off.
Kelly Nelson: They do. On top of it. They can take it as an income subtraction.
So it’s, you know, really, really good.
Kelly Nelson: And another benefit is let’s just say mom and dad opened a 529 college savings account when their child was a baby and they’re, you know, they’re getting close to transitioning out of high school and maybe. Maybe that, that student’s pathway is not college. Maybe they want to get a, uh, you know, a certification for a certain skill or something.
Pathway is not college at this point. They can roll those funds over from a 529 account into an ABLE account. And now it is expanded how [00:39:00] that fund, those funds can be used, which was Formally earmarked only for education, college tuition books, right now they can put it into able and they can use it for anything that supports that person in his health, independence or quality of life.
And let’s just say maybe six years down the road, they decide, you know what? I do want to go to college. Guess what? They can use able funds to pay for. College tuition, room and board books, everything. So it just gives them more flexibility.
Frances Shefter: Right. And I mean, I, and it’s funny, cause like, I’m just thinking about people that I interact with in the, in the community and how, well, I don’t want to do a 529 college because what if my kid doesn’t decide to go to college, then what happens?
Well, now it turns into an ABLE account and you’re not losing anything, you know? So like, if you have a 529 and you’re like, ah, my kid’s not going to, you know, or whatever. Here’s something to think about, like of, that’s so like, it’s amazing. Like, it’s just, [00:40:00] I don’t know where I’m going right now, but it warms my heart that like, legislation is doing something for our kids, you know?
And, and they’ve, they’ve put it out there as bad as some of the other laws might be and rules might be with, uh, with IDEA and they’re still there, you know? Right. But it’s like that they are at least trying to do something to help us help our kids.
Kelly Nelson: Absolutely.
Kelly Nelson: And I think about the journey to the passing of the ABLE, uh, the ABLE Act.
It really all started with just one dad, Steven Beck. Steven Beck was his name. And he was like, look, I’ve got two daughters, one I’m saving for, for, you know, in their college savings plan. I can do this. I can save for their future. My daughter with down syndrome cannot save for her. I can’t do it because she can’t have any assets over 2000.
So it started with a conversation. That conversation grew and grew and more parents and self advocates and then service provider agencies and disability advocacy groups. And this it took. Um, probably a [00:41:00] decade before it actually reached, um, the point where it was signed into law. But finally we have it and it is a game changer, breaking that cycle of poverty for people who were just spending down money so that they wouldn’t lose benefits now can save that money for what they need and need for their future or what their goals and dreams are.
So it’s a game changer.
Frances Shefter: Yeah, and, you know, I hear people saying, well, if you’re spending down money, then you don’t need the money, but, you know, what you just said, what you went through with your child of 700 a month, you know, like getting that paid for, like, if you have to spend down $1,000, In two months, you’ve already, you know what I mean?
Like, like, I always hear people like, Oh, you’re just trying to game the system and get something for nothing and all that other stuff. But that’s not what it’s about. It’s about having the extra resources to care for our kids. It’s not, it’s not like, Oh, great. Now I can go on a Disney cruise. Cause I have SSI, you [00:42:00] know?
Kelly Nelson: And I think of, you know, a lot of, um, parents that I’ve talked to across the state, I think the worst call I ever received was from a couple that were. Probably in their 80s and their son was in his 50s and, um, he was receiving SSI benefits and he had, you know, some, um, receiving residential services while parents were both ill and in the hospital, weren’t paying attention.
His regular checking account went over $2,000 for a period of time. He lost everything, lost his housing, lost his benefits, lost everything. And then you think, how can this happen? And the dad was literally crying on the phone and saying, of
Frances Shefter: course,
Kelly Nelson: why didn’t anybody tell me about an ABLE account? I wouldn’t have known that I would have just put the money, the extra money from social security in an ABLE account.
They’re dealing with an end of life situation. They’re not going to be here. That ABLE account money could be in that account for their son’s use to supplement. I mean, even if a [00:43:00] person is receiving the maximum amount of SSI benefits, 934, I think this year I could be off of that amount. Guys, is that enough to pay for rent, utilities, groceries?
I would like to know where in Maryland someone could live. on 900 a month for all their expenses. And that’s what social security maximum amount is. So they need to be able to save for things like dental, like that spend down we were talking about. People are like, Oh my gosh, I got to spend this money down.
Only three months later, they need a major root canal. Oh, no dental insurance. Now they don’t have money to pay for it because they spent it down. So they wouldn’t lose. their critical benefits. So it’s really sad.
Frances Shefter: It is. God. Wow. It’s just, it’s blowing my mind. I’m so glad I had you on. I’m so, and I’m sure like friends and family and clients that are listening and watching are going like, Oh, thank you.
You know, you might have an influx of calls in the [00:44:00] next couple of weeks. Um, so if you want to open, yeah.
Frances Shefter: So if you want to open an ABLE account, um, you know, for any of our listeners, what do they do? Who do they contact? What’s the best? route or the easiest.
Kelly Nelson: Absolutely. So we recommend if you’re interested in having a Maryland ABLE account that you actually type in www.
marylandable. org and then it’ll take you to our website. You’ll see our program disclosure book there. If you want to go into more of the nitty gritty of any of the investments or anything like that, that’s all in there. There’s a frequently asked section there. But at any time that you’re ready to open an ABLE account, you click on a little button at the top of the screen that says, Let’s Go.
Let’s open an ABLE account now. And it walks the family through the enrollment process. Um, so that’s pretty simple. It takes about 15 minutes to do it. Um, they are again, online accounts. So you’re going to be linking your ABLE account With an existing checking or savings account, any bank account of your choice.[00:45:00]
I think it depends on like which one works best for you. So
Frances Shefter: question, I guess, if we, if I already had, like if somebody already has a savings account for their child, cause they’ve been saving, they didn’t know about ABLE, can be kind of like that money be converted into the ABLE account?
Kelly Nelson: Yeah. So you could link, let’s just use that example.
Someone has a savings account for their child. When you open the ABLE account, but you can link that savings account. To the ABLE account and you can take transfer. You can make a transfer in to the ABLE account as much as you want. At any time you want to get the money out of ABLE, you click transfer, hit withdrawal, it goes back to that linked bank account and you can access those funds.
So that’s, that’s the way you get money in and out of an ABLE account.
Frances Shefter: Got it. So then just double check with your bank and make sure you keep your minimum in that bank account. Right. Right. Yeah. So yeah, we, we see
Kelly Nelson: people that, you know, link it to like a checking account. Um, uh, that’s what worked [00:46:00] best for me and my husband when we first opened our daughter’s ABLE account, she was 14 or 15 I think.
She didn’t have a job. She didn’t have any benefits. I mean, she doesn’t have really any money to be putting into it. So we linked it with our regular family checking account and that’s how we get money in and out. Yeah. Now. I hope that one day my daughter gets a job, one day she’ll have a, I hope she has a job and a bank account.
We can also link her bank account to the ABLE account and that way any money she wants to put into her ABLE account just gets electronically moved from her checking or savings into ABLE.
Frances Shefter: Can you do it to more than one account or no?
Kelly Nelson: Yes, as long as the accounts that you’re linking belong to either the account owner, beneficiary, or the person that’s the ALR.
Frances Shefter: Got it. Okay, that makes sense. So
Kelly Nelson: grandma cannot link her account. Got it.
Frances Shefter: Okay.
Kelly Nelson: The ABLE account, but grandma can get the gift page and anytime she wants to make a contribution, she clicks on the gifting page link and [00:47:00] she can make
Frances Shefter: a contribution. That is awesome to know. I’m so excited. I can’t wait to get this out there.
And I know my social media person is going to blast this like crazy. It might even be one of a, of a boost because it’s just, I think it’s just such an important tool for everybody to know about. And I know from being in the community and talking to other parents, people don’t know about this.
Kelly Nelson: know, they don’t.
And yo we’re, we’re running out to mention one thing.
Kelly Nelson: Tha features is with the able an option to have an able looks like a regular visa of credit. It’s actually linked to your able accou transfer funds from able Now, the reason I love this is because I, like I said, I have a 20 year old daughter. I got her the card about four years ago.
It has been the most wonderful financial literacy tool for her because let’s face it guys. Budgeting, saving, [00:48:00] spending money itself is very abstract, especially in a world where we don’t actually hold dollars in our hands that much, right? It’s all very abstract. So this has taught her so much when I gave her the card, she was so excited.
She said, can I get my phone? I want to take a picture of it and send it to my friends. Lesson number one. No, she didn’t know not to do that, but why would she? She’s 16 year olds, you’re old, didn’t have a card. So we talked about how this is important. you know, bank account, you know, give it to other people, whatever.
But then I put money on that account. She’s not able to access all of the funds in her ABLE account, only what’s loaded on that card. And we began practicing saving some spending some, she goes on her CBI community based instruction classes with her, you know, program at school. She takes her card with her, but I’ve also linked it to.
Life expenses that cell phone bill T Mobile. So all of a sudden she’s like, wait a minute Why did this money come off of my card? Well, Lily, that’s because you have to pay [00:49:00] every month for that phone and people are like, well, of course But she didn’t know that right? I’m trying to teach her about living expenses So it’s been just a wonderful tool and it is an option for families who are interested in that
Frances Shefter: Oh, that is so amazing.
Frances Shefter: Yeah, just I mean like I’m like, okay everybody now go get your ABLE account And I’m assuming if you’re in a different state state, it’s probably their state, able. org or just Google your state able and I’m sure you’ll find it. I’m glad you said Google
Kelly Nelson: because when, if I want to shout, just say one little word of warning.
If you Google Maryland able, what is likely to pop up is something that says able now. in Maryland. And a lot of people are clicking on that link. That is able now that’s a Virginia account, which is wonderful. If you want to be with Virginia, that’s fantastic, but know that you’re being, you’re going to sign up for Virginia because your contributions as a Maryland resident are not going to have any ability to be taken off of your income taxes.
So they, they, they have named it able now so that, you [00:50:00] People know that it’s open for national enrollment and that’s what pops up. If you pop, if you put in there, Tennessee able, it would say able now in Tennessee. So just a word of warning, type in our URL, www. marylandable. org. If you want to be with Maryland.
Got
Frances Shefter: it. That makes sense. That is so awesome. Thank you so much. This has been just, I mean, This is like gold. I, you know, like I, I don’t even know how to put a price on it. This has been so amazing for me personally. I know for family, it’s for friends, for potential clients. Um, this is just like, I would have to say probably now one of my favorite episodes, cause I think I, I just, in the sense of like, that everybody needs to know this, you know, others are just more tailored to certain type of people, but this is one that no matter what your diagnosis is.
This is something you need to know. So thank you so much for being on the show and sharing your wealth of information.
Kelly Nelson: Thanks, Frances. It was a pleasure.
Voiceover: You’ve been [00:51:00] listening to Stress-Free IEP® with your host, Frances Shefter. Remember, you do not need to do it all alone. You can reach Frances through Shefterlaw.com where prior episodes are also posted. Thank you for your positive reviews, comments, and sharing the show with others through YouTube, LinkedIn, Apple Podcasts, Spotify, Google Podcasts, and more.
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