Patty Manko Sat, Jun 20, 2015 @ 06:00 AM 7 min read

Answers to FAQs: How to Use the ABLE Account



We have received many questions, from both families and professionals, about how to incorporate the ABLE account into their planning. We sat down with John Nadworny to ask him these questions and share with you the answers. 

Here is the first in a series of blogs featuring answers from John to questions about how to use the ABLE Account.  We will continue to publish information about the ABLE Account as it becomes available. 

Q: When will the ABLE account be available and how do I set it up?

John:  The US Treasury made a commitment to issue final regulations by June 30, 2015. At this time, it is uncertain as to whether that deadline will be met.  Although some states have initiated offering the ABLE account, there may be future issues depending upon Federal regulations. 

Massachusetts has formed a task force (of which John is a member), to craft implementation of the ABLE Account. Although it is difficult to give an exact date at this time, the task force estimates ABLE accounts to be available in early 2016.

Q: The ABLE account sounds great but will using it effect my eligibility for government benefits?

John One of the main purposes of the ABLE account is to allow individuals with disabilities to save without jeopardizing their eligibility for government benefits. It is important to be aware that SSI eligibility is suspended if account exceeds $100,000. Although, Medicaid eligibility continues if account exceeds $100,000.

Q: My son is about to turn 18 and he has a UTMA account with a balance of about $12,000 from gifts and other sources.  Would an ABLE account work for him  ?

John: The ABLE Act allows the transfer from UTMA or UGMA accounts to an ABLE Account.  At this point there are no limits on how much can be transferred from one of the above accounts to an ABLE Account.  This is one of the most significant benefits of the plan.

However, there are considerations when making this transfer.

ABLE account contributions must be made in cash.  Both the personal and tax consequences of liquidating the UTMA account holdings need to be considered when making this transfer.  In this case, due to the relatively small amount, $12,000., the tax consequences will most probably not impact the ABLE being the right choice for these funds.

If there are significant assets involved, a trust should always be considered as an option.  The term significant is different for everyone, but a starting point may be $50,000 for many families.  Again, every situation is different; therefore you should speak to a planner who specializes in Special Needs Planning or a qualified estate planning attorney.

Q: I want to gift to all my grandchildren while I am alive. Can a grandparent give a gift to an ABLE account when gifting to grandchildren's 529 plan accounts?

John:  Like a 529 College Savings Plan, the annual limit that can be deposited into an ABLE Account will likely be $14,000 each year (based on 2015 limits). Although I have not seen this in the plan’s language, this amount will likely increase as it is tied to the amount that a person can annually gift for estate tax purposes. However, currently with a 529 College Savings Plan a person can deposit up to $70,000 in one year but not contribute any more over the next 5 years without filing a gift tax returns. This is a detail that will probably be worked into the plan as the US Treasury finalizes the regulations.

When account balances exceed $100,000 there will be an offset for an individual’s SSI check.  Also, although your grandchildren may have more than one 529 account, an individual may only have one ABLE account.


Click here to  Send us your questions  about the new ABLE accounts.

Journalists may contact John directly via or by telephone 781-756-1804.

The opinions voiced here are for general information only and not intended to provide specific advice or recommendations for any individual, nor intended as tax or legal advice.

There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes. Investing involves risk including loss of principal.

Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program. Consult with your tax adviser before investing.