With the beginning of a new year, it’s important to consider taking a moment to review your financial goals and objectives and align your savings and investment plans for the year ahead.
We’ve invited Thomas Nurse, Special Needs Strategic Consultant and proud father of Shelby, an ABLE United account holder since 2016, to answer some of your questions when it comes to saving and investing.
Q: Why is it important to save?
A: For individuals with disabilities, saving means so much more. When you are able to save money, you can buy options – options mean choice, choice equals freedom. Currently, many public benefits programs that support individuals with disabilities, like Supplemental Security Income and Medicaid, require limits in income or assets. But, ABLE accounts are an absolute change of that culture and allows the opportunity for you to now buy your way into greater freedom.
Q: When should you start saving and investing?
A: The decision to start saving or investing varies for individuals and families; but if you can, start now. One of the most wonderful things about ABLE United is that anyone can contribute to an account. For example, when a child is first born with special needs, that is a great time to open an account, when you can encourage the support of friends and family.
Q: What kind of benefits do I get by opening an ABLE United Account?
A: ABLE United creates the opportunity to dream. It helps that individual with a disability envision a future and a goal that they can work towards. These accounts are a complete change from a poverty enforced life to being in control and having essential benefits that are necessary because of your disability.
ABLE United also provides an incredible opportunity for family involvement because now instead of not talking about money or benefits or estate/ future planning, this sets a foundation to engage in real meaningful conversations about money and the future.
Q: Do I have to file taxes on an ABLE United Account?
A: The specific requirements to file taxes are certainly a question for your tax professional but in general terms the earnings are not taxable.
It’s also important to know that each ABLE United account is treated separately, and each will receive separate tax documents. At the end of each year, account holders will receive a 5498-QA showing contributions and the establishment of an ABLE account. If a withdrawal was made, you will receive a 1099-QA showing the earnings and basis of the distributions.
Q: Are contributions considered an asset?
A: The money in an ABLE account is an asset to the individual with a disability. But it is important to remember that income-based and needs-based programs like Supplemental Security Income and Medicaid do not count the money in an ABLE account as a resource that could affect eligibility.
Q: What is the FDIC savings option?
A: Investment requires risk and the greater the risk, the greater the potential reward. An individuals’ risk tolerance is specific to their situation and preference. One of the greatest worries we saw at the beginning was people not wanting to take on more risk. Some people just want to put their money in a savings account, just like a bank. The FDIC savings option allows you to save without taking on any additional risk.
Q: What’s the difference between the investment options and FDIC savings option?
A: It’s important to remember that ABLE United has the benefit of being under the investment pool of the Florida Prepaid College Savings program, so these are industrial grade investments with deeply discounted fees that an individual would never have access – you are getting a super good deal and accessing really high-grade investments. You also have the ability to choose from predesigned portfolios that range from conservative, moderate, and growth as well as international and US funds.
But, more importantly, now individuals with disabilities have the opportunity to invest and grow their money and contribute to our powerful economy. As a father and a financial professional, I understand the opportunities the financial industry provides to the general population which have historically excluded individuals with disabilities and the power of choice that comes from being able to manage your own money and future.
Q: Why would you recommend ABLE United?
A: I would highly recommend that individuals consider utilizing ABLE United for several reasons, one of them being the importance of freedom of choice that I have previously explained. But an ABLE account also protects your options when it comes to eligibility for benefits programs. Finally, the fact that the individual with the disability is in charge of their future and can provide leadership and contribute to society is one of the main reasons I would recommend ABLE United.
When it comes to financial planning for individuals with disabilities, it is important to understand that each person’s situation is unique. The information provided in this article is of general nature and individual recommendations should be consulted with your own financial professional.
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