today, we’re going to be talking about the ins and outs of Able accounts. Able accounts are a wonderful tool for blind people and people with disabilities to save money without impacting their eligibility to receive means tested benefits. During an omnibus spending bill that was passed in late December of 2022 and takes affect this year, the maximum eligibility age for Able accounts was increased from age 26to age 46.
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Transcript
MOe: One huge benefit is that anyone can add money into this Able account that knows the individual. So, the parents, the cousins, um, just anyone can contribute to a person’s Able account. It does not just have to be the individual, and that kind of helps with, if they are on SSI, with birthdays and things, they can just contribute into that fund.
Chris: This is the Penny Forward podcast. A show about blind people building bright futures one penny at a time. I’m Chris Peterson, and we’ll bring on Liz Bottner and MOe Carpenter in just a second, but first, today, we’re going to be talking about Able accounts. Able accounts are a wonderful tool for blind people and people with disabilities to save money without impacting their eligibility to receive means tested benefits. But even if you’re not receiving means tested benefits, and we’ll talk about what those are in a second, an Able account still may be a great tool for you. So, stay tuned, and we’ll be talking all about the details of Able accounts. And the reason that we’re doing this this week, by the way, is because during an omnibus spending bill that was passed in late December of 2022 and takes affect this year, the maximum eligibility age for Able accounts was increased from age 26to age 46, making it possible for many more Americans who are blind, or have another kind of a disability, to access Able accounts. So because of that, we wanted to cover this topic again at this time, since many of you may have thought that you weren’t eligible for an Able account before, and now, you just might be. So you might want to reexamine the details. But first, let’s say hi to our other hosts, Liz Bottner and MOe Carpenter. Liz, how are you?
Liz: Hello. I’m doing well. How are you?
Chris: Good, and MOe, how are you?
MOe: Hello. I’m doing fine.
Chris: Great. It’s great to have both of you here today. So let’s kick it off by starting to talk about, what is an Able account? An Able account is a tax advantaged investment account that is available just for people with disabilities. Before 2015, people with disabilities, especially people who were receiving supplemental security income, Medicaid, and some other kinds of government benefits, were not allowed to save any more than about two thousand dollars in a savings account. And if they did, their benefits would be cut off, whether they were actually making regular money or not. Well, in 2014, the Able act was passed. It stands for “achieving a better life experience,” and it created tax advantaged investment accounts, called Able accounts, that were available to people with disabilities, and they allow people with disabilities to save up to, if you’re receiving SSI, as an example, one hundred thousand dollars before your SSI benefits will be cut off. People who are not receiving SSI, and are not receiving other means tested benefits, also get some benefits, though, out of an Able account, in that the money that you save in an Able account is put in after taxes, meaning that you pay taxes on the money now, as you’re putting the money in, but, as the money sits there, and as it grows, due to the magic of compound interest, you can withdraw the money, and any interest you earn on it, tax free at any time, as long as you spend it on a qualified disability expense. And qualified disability expenses are really anything that affects your health, your quality of life, or your well-being. The law defines a number of different categories for qualified disability expenses, and when Able accounts first came on the scene, I believe that the first people to open Able accounts were able to do so in 2015, though most of the first timers did it in 2016, the rules were a little bit unclear. The law told us what we could do, but laws are then augmented by rules set in place by the secretary of the treasury, and there were proposed rules put in place in 2015, but those rules weren’t actually ratified until 2022. So now we have rules in place that tell us that qualified disability expenses really include just about anything that affects us as a person with a disability and improves our quality of life. Whether it is actually related to our disability or not. So some obvious things might be things like your home mortgage, or your apartment rent, but some less obvious things might be things like a gym membership. Or going to school. Or getting decent transportation that gets you to and from work on time every time. These are all things that, after a lot of discussion over the last few years, people have determined to be qualifying disability expenses. So, while it is possible to spend the money in your Able account incorrectly, it’s very unlikely that you would do so as long as the money that you are spending is benefiting you, instead of someone else. Now, MOe is going to talk a little bit about who can open an Able account and why you might want to. MOe?
MOe: Thanks, Chris. So, who is eligible for Able accounts? I know that Chris kind of already went over that. We just, excitingly, had a change to the law, and so now, those who are forty-six, instead of twenty-six, are now eligible for this. You do have to have a qualified disability. This disability can be blindness, and it can be other kinds of things, just as long as the government decides that you are disabled. So as long as your disability occurred before you turned the age forty-six, you are eligible for this kind of savings account. Or spending account, I guess. Depending on which state you live in, there are many different plans for many of the different states. Is there anything else you guys can think of that I left out?
Chris: No, I think you covered it pretty well. You want to go on to why someone might want to open an Able account?
MOe: So there are lots of reasons why. Of course, one of the biggest reasons why is, since you did pay your taxes before you put in that money, that money can be taken out tax free, which, yay, ’cause we all know we get taxed way too much anyways. Another reason why you may want to open an Able account is if you are a person that is on the SSI system, with the SSI system, you’re only allowed to have a savings account of two thousand dollars, and we all know, two thousand dollars doesn’t really pay for much, especially when you’re thinking of emergency fund money. Um, I know my mortgage itself is just about that much a month, so two thousand dollars doesn’t last very long, and me having a household of six people, my food budget is probably about a little more than half of that two thousand dollars. So, you, it’s really nice to have the Able account to cover a little bit more of an emergency fund than those other things. Another couple of reasons you may want to have an Able account is if you are saving up for some big expense. Think the ACB or NFB national conventions. Those are quite expensive. I mean just the hotel room is about a hundred dollars a night depending on where the particular convention is located. So just for that week, you’re already looking at seven hundred dollars, and then, you know, all your travel expenses, and just being able to eat while you’re there, and to have fun while you are there. Some other reasons could be if you are part of any kind of sports group or anything, you can use some of your funds to plan for that kind of thing. If you are planning some further education, you can use it for your college expenses. You can get some kind of assistance usually through your state, but they don’t cover everything, so it’s nice to have things for books, or transportation, I mean, come on, Guys. (Laugh.) We all know transportation is such a big part of a blind person’s budget. AND then some other reasons are just, in case you decide that you need to relocate to get that new job after you got that education, and for retiring early, or just retirement in general.
Chris: As a parent, if you have a, child with a disability or a blind child, and you know about that early on, you can open an Able account for them and start putting money away for their future expenses. And even as little as twenty-five dollars a month. If you put that away until they turn age twenty-six, let’s say, you could have fifty thousand dollars, or, rather, your child could have fifty thousand dollars, in that account when they turn twenty-six. So, that could open them up to a lot of possibilities too, such as taking a job, maybe being able to put a down payment on a house or a condo wherever the job is located so it’s convenient to get there, uh, being able to buy assistive technology products that they maybe need for work or school, all kinds of different, different things that you can do to help your kids out, using an Able account for them as well. And uh, if you don’t choose to use those expenses for an Able account, or you opened a 529 college savings plan for them, you can roll that money into an Able account with no penalty, and uh, it gives us a wider range of possible uses for money that we set aside for our kids than, uh, you know, than the average non-disabled kid would get So, uh, that can be a big deal. Now I’ll turn it over to Liz, who is going to talk to us about when and where you might want to open your Able account.
Liz: Before we talk about when it might be a good idea to open up an Able account, I want to throw two situations out there that would be helpful to maybe wait and give pause before you open an Able account. The first situation is when you and/or your family is struggling to make ends meet. Another situation is if you or your family are paying on one or more high interest loans. If you feel like you and your family are struggling to make ends meet, that very well may be the case, but it may not also be the case. And to help determine that, you can build a budget, and make sure that you take into account all of your expenses, all of your income, and get really a bigger picture of what exactly are your finances like monthly. If your budget shows that you really do not have any left over money at the end of the month to spend on anything, and you’re using all of your money to spend on necessities, then it may not be the best time to open up an Able account. If, however, your budget shows that you do have discretionary money that you can put away for a rainy day, as it were, then absolutely. You certainly can open up an Able account with that money. Because it’s not taking anything away from what you need for your necessities of food, rent, mortgage, things like that. In the situation of paying one or more high interest loans, those are very, very important to pay off and deal with first, and so that is of more importance to, to take care of, at which point you can then put the money that you were paying towards those loans into an Able account. Other than that, really, when to open an Able account, I think it’s kind of a harder question, maybe when not to open up an Able account, but there’s, really, there’s, the benefits outweigh everything. You know, the earlier the better. If you’re able to do it. To learn more about Able accounts, you can go to the Able National Resource Center at
and that will give you more information in terms of all the different Able related state programs that are available.
MOe: I am gonna jump in here quick, Liz, and add one thing that, do make sure that you look to see if your state has an Able account program, ’cause there are sometimes even more tax advantages to using your particular state’s Able account vs. other Able accounts. You can only have one Able account, so you want to make sure you pick the best Able account for yourself, but it does not need to be your state Able account.
Liz: Exactly. It, it may or may not need to be. And that’s gonna depend on what you want in your account, in terms of terms and things like that, but do not just limit it to your state. Definitely do your research and see what will work for you before deciding where you want to go. And some accounts do have the ability to transfer from, if you open it up in one state, you may be able to transfer it to a different state as needed, but good point, MOe. Thank you.
Chris: Yeah. You can always move your funds from one state program to another state program. As long as the program that you’re moving to allows you to sign up for it. And the reason that you can roll over from one state program to another is because, maybe you did make a mistake. And that’s okay. And you find out later that another program is better for you. Or, maybe you start out in one state, and you move. And you find out that the state that you’ve moved to has tax advantages in their Able program that you want to take advantage of. So, there are definitely reasons why rolling over is possible, and where it would be helpful. Okay, so now that we’ve covered sort of the basics of Able accounts, I thought it would be interesting for us to have a brief conversation in the time that we have left. All three of us have different experiences. Starting with myself, I opened my Able account in 2020, or maybe 2019, and Liz just opened her Able account just a couple of weeks ago, and MOe; if I’m not mistaken, is still doing her research and is about to open one. So, you get kind of the broad spectrum of experiences from all ends of the spectrum.
MOe: I’m still reading all the paperwork that goes along before, so I know exactly the terms and things that I’m looking at getting myself into.
Chris: Yeah. It’s, it’s important. So I can tell you, first of all, my experiences with opening an Able account. I chose to open one in the Massachusetts Attainable program, because they have a slightly different fee structure than a lot of state programs do, and also because there are no specific tax advantages in the state of Minnesota, or there were none at the time that I opened my Able account. So, I thought that this would work best for me, since I kind of just wanted to dip my toe in the water and see if it was warm. And I’ve been contributing to it for the last three, maybe four years now and have a few thousand dollars in my Able account, as well as savings in a bunch of other places, and I’ve actually used it for a few qualified disability expenses along the way, although, most of what I’ve been trying to do is accumulate savings for a point at some time in the near future when I’m expecting to, uh, kind of be out of work for a little while, before I start working for Penny Forward full time. So, I’m doing my best not to take money out. And I’m doing my best to put money in, and uh, it’s, it’s going well. I really like the sign-up process. The sign-up process was really easy for me. Managing my investment options is really easy because they only give me six choices, and the six choices are, are fairly easy to understand in terms of the ratio of stocks and bonds, and if, if you’re not comfortable with investing, uh, every state program has a checking or savings account kind of an option that you can pick too that’s, uh, entirely safe and just lets you keep your money around for the times when you just want to spend it. And for some lower income people, especially single people, uh, you may find that your Able account is the only bank account you need. I would advise people that are married, especially to a non-disabled spouse or have children that aren’t disabled to use their Able account a little bit more sparingly, and be careful to use it only on yourself. Because the idea of a qualified disability expense is that it needs to benefit you. And it can sort of tangentially benefit someone else at the same time, but you couldn’t, for example, buy clothes for your kids using the money out of your Able account. Because there’s no way that having well dressed kids really improves your health, well-being or your quality of life. At least not that I can see, but, uh, somebody …
MOe: I could argue it, but …
(MOe and Chris laugh.)
Liz: I actually could also argue that, but, you know. That’s a whole different podcast episode, but …
MOe: ‘Cause mental health is a whole big thing.
Chris: Yeah.
(Liz laughs.)
Chris: And, and, and there are a lot of kinds of arguments for why the qualified disability expenses categories are so broad, and, you know, the two of you may be right. It’s, it’s a little bit hard to come up with examples for, you know, why something isn’t a qualified disability expense. And an example that I heard years ago was, “Maybe you have a, a brother or sister that lives in Europe and you live in the United States, and, and you give them money out of your Able account so that they can buy a car. Well, if you’re not living in Europe with them, they’re probably not going to be driving you around in the car. So it’s hard to see how that benefits you. But if they lived with you, and you used your money out of an Able account to help them buy a car so that they could provide you transportation to and from work, then it might be okay.
Liz: Yes. I definitely could see that.
Chris: Yeah.
Liz: I could see why the Europe thing is not okay, and why the if they live with you thing would absolutely be permissible.
MOe: That’s a huge reason why I love that the housing is such a big part, and like one of the first things that they mention that is a qualified expense, because I could live in a tiny little room, or I could live in my four-bedroom house, but I can claim all of that as a qualified expense for my mortgage, or paying down on anything that is house related.
Chris: Certainly.
MOe: Even though, technically, my house benefits all of us, but, you know, I do have to have a house. So, …
Chris: Certainly. So, Liz, you just opened up your Able account.
Liz: I did.
Chris: What are your impressions?
Liz: My impressions are honestly, well my first impression is, “Why did I not do this sooner?” And the honest answer to that is that I was kind of stuck up in those categories of disability, like, you know, “What if I want to take the money out and use things, you know, not for my disability related things?” But I really didn’t realize that the categories are as broad as they are, or the other thought is, “Yes, okay, maybe I have money that is going towards my rent that I absolutely have already allocated, but instead of that, I could take the money out of my Able account for rent, and then use the money that I, outside of the Able account, was going to use for rent, and use that for something else.” So once that was explained to me, once I kind of wrapped my head around, “You know what, that’s, that makes sense to me,” I decided, “You know what, let’s just do this. There’s no reason not to. Let’s be smart about this, let’s make my money work for me harder than it is currently, and so I, in about a forty-five-minute time span, signed up for an account. I didn’t put money in right away, although that changed a few days later when I said, “You know what, why is this just sitting here doing nothing?” Uh, and I put money in, and then a day or so later decided I wanted to actually make a regular contribution, because out of sight out of mind, right? That money is still mine, it’s just going somewhere else, and working for me smarter than if it were to be just sitting in my checking account potentially. Or even my savings account. The process was extremely easy to sign up. The investment options, as Chris said, were very easy to decipher. I did choose one of the mixed investment options, uh, just because that’s what I was comfortable with, however, it’s nice that there are different types of investment options so that if you’re more comfortable, or less comfortable, there is an option for you. I also wanted to mention that, in addition to states, Washington D.C, for those of you who may live not in a state, it is also available in D.C. I, even though I reside there, did not choose to go with that program, um, but it is not just limited to actual states. I don’t know about U.S. territories, I don’t believe that’s a thing, I didn’t see that in the list of options when I just looked just now, but, uh, but D.C. is definitely an option for those who may decide that you want that because you live in D.C.
Chris: That’s a good point. I don’t know of any U.S. territory programs either, but several states have multiple programs. Virginia is one of those, and, if I’m not mistaken, Oregon is one, and there may be others as well, but uh, there are more Able programs than states that have Able programs, uh, right now. Um, …
Liz: And not all of the programs use the same financial institutions I believe. I don’t know how many financial institutions are affiliated with Able programs, but if you have a financial institution already, an investment financial institution, you may want to check to see if any of them are affiliated with what you already have, if that is suitable for you. If not, then don’t use that strategy, but that might be where to start if you’re kind of overwhelmed with everything.
Chris: Yeah. That’s a good point. While there are a number of Able programs, and most of them are, are kind of aligned by state, there are some similarities from state to state. There are a few different consortiums out there that have kind of crafted their Able programs in the same way, so it may seem like there’s a lot of choices you have to go through, when in reality, you maybe have about eight different options as far as the different types of Able programs that are out there. There’s even one that is sold by financial advisors if you would be more comfortable with having a financial advisor manage your Able program for you. So MOe, you’re still in the process of doing your research, but, uh, what are your thoughts so far on Able accounts?
MOe: So I live in the state of Iowa, and in the state of Iowa we actually, I believe, started to try and do kind of an Able like program before the end of 2015. The only issue for that for me was that this was a time period that my life was in a complete transition stage. My twins were born in 2016, plus my husband got a new job, and we moved out of the town that we were living in. So I didn’t have the ability to even look at the state option back then. Like I said, it was not the Able account, but it was something similar, I think it was maybe some kind of bond, or, I, I’m not a hundred percent sure. I know there was some kind of account that you could put money in, and that the whole goal of it was so you could save up for like technology and things for the disabled. Uh, so my state does have their own Able account. We do have a tax advantage to using it within the state, and we have fee advantages to using it within the state. Like I’ve said, I haven’t read through all the material, but I probably will go ahead and go with my state one, at least to get my feet wet in the program, and then maybe look at other ones to see if there’s a little bit better options out there, because at least to me, the fees seem kind of high, but that might just be me, and for, like, our checking account program, there was like a two-dollar a month fee, and maybe that’s fairly standard, but to have the checking account option, I’d really prefer not to have to pay for it. So, ….
Liz: Not all programs do have those fees, though. I will say that.
MOe: Yeah, and that’s why I was like, I, I might look at doing a different state in the future, but I think just to get started, I will go ahead and look in my state.
Liz: As long as it can transfer, which I don’t know if all of the programs can transfer, but if, if they can, then you’re, you should be fine. But you, that would be the first thing …
MOe: I believe they’re supposed to, as long as it’s another Able account. There was different terms of, like, if it had to be done within sixty days if you had to roll over, or if you had to cash out, and different things like that.
Liz: Oh. So you should be fine.
MOe: Like I said, I’m reading all the paperwork. (Laugh.)
Liz: Yeah. So, but you should be fine.
MOe: There’s like hundreds of pages of things to, to read.
Chris: You may want to check because a lot of programs too have lower fees if you do things like, uh, get paperless billing. Or, paperless statements.
MOe: Right. And if you have certain balances and things. And so that’s the part that I haven’t gotten to quite yet in the paperwork.
Chris: Yeah.
MOe: So, I’m still, I’m still reading, and I’ve had a lot of things going on, so I haven’t gotten all my reading done.
Chris: Yeah. Uh, I will say that, while we’ve painted a pretty Rosey picture, uh, of Able accounts, and I really do believe that they are a wonderful tool, not everybody is in agreement with that, and one of the things that people have objected to are the fees. And I have to admit. There’s something to be said for that. Especially like you pointed out, MOe, when, when most banks offer fee free checking, or if your local bank doesn’t, you can get that through an online bank, uh, with almost no minimum balance at all, it seems funny to have to pay for any kind of fee for a checking account just to have it in an Able account. And some people still might find it to be useful, though, to do it out of convenience. Because you can, if you’re using your Able account as your, your only account, uh, you don’t have to keep as rigorous records. As long as that money is benefiting you, then, you know, you’re probably a little bit better off. If you are receiving SSI, or some other kind of uh, government benefit where they, they want you to spend your money in a certain way, then maybe using your Able account as a checking account may help you with that. Uh, as an example, social security, if you wanted to spend money out of your Able account to pay your rent, for example, they need to be able to see that you pulled the money out of your Able account in the same month that you spent it on your rent. So you couldn’t, say, take the money out a month after you paid your rent and say “I’m just reimbursing myself for paying my rent.” And similarly, you couldn’t take it out the month before, and say, “I’m just taking this out so that I have enough money to pay my rent.” They really want to see those, those bank transactions happen at around the same time, and, using the checking account option in the Able account makes that simpler. But it is, unfortunately, uh, not the least expensive checking account out there. And, and I find myself objecting to that, a little bit. Now I don’t use the checking account option; I use it as an investment account. And the fees for using it as an investment account are somewhat higher than fees for other types of investment accounts, but the tax advantages outweigh the fees, in my opinion. Still, I did want to point out for the sake of completeness that that is a, uh, point that some people have made that they object to.
MOe: One last thing, before we go, is, I just wanted to say, one huge benefit is that anyone can add money into this Able account that knows the individual. So, the parents, the cousins, um, just anyone can contribute to a person’s Able account. It does not just have to be the individual, and that kind of helps, if they are on SSI, with birthdays and things, they can just contribute into that fund.
Chris: That’s such an important point, and I’m so glad that you brought that up, because we almost missed it, but it’s, it’s almost like having a, uh, long running Go Fund Me. Because the Able programs make it really easy for you to just send your friends and family members a link, and say, “If you want to give me a gift, for whatever reason, put it here, and it goes right into my Able account so that I don’t have to worry about it affecting my benefits.” And for, for a lot of people, that can be a really big concern, and while they may be poor, and collecting benefits, their family may want to be supporting them and feel like they can’t. So, yeah. Thank you, MOe. That, that was a really good final uh, uh, point to make here before we end.
Liz: And then truly, that, however much money it is, five, ten, twenty dollars, X number amount of dollars, that, you know, Uncle Charles is giving you, actually is the five, ten, twenty dollars. It’s not seventeen dollars because of fees that are taken out of that.
Chris: Absolutely. All right, well that’s all the time we have for today, so thank you for listening to the Penny Forward podcast. Thank you, Liz, and MOe, for being here, and sharing your experiences and your thoughts about Able accounts. Penny Forward is a non-profit organization whose mission is to help blind people navigate the complicated landscape of personal finance through education, mentoring, and mutual support. We offer self paced, online, accessible courses about lots of different financial education topics, weekly members only group chats where you can ask questions of our instructors, and other people in the blind community, who may have similar situations to you, a weekly Penny Forward newsletter that comes to you by E-mail, simply for signing up, and access to one to one coaching where we can help you with more complicated and more personal situations. That all costs just nine dollars a month, or 99 dollars a year, and you can join us by logging on to
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anyway, and clicking on the “donate” link. Because we are supported by your donations. The Penny Forward podcast is produced by Chris Peterson and Liz Bottner, editing and post production is provided by Brynn Lee at
and transcription is provided by Anne Verduin. And now, for all of us in the Penny Forward community, I’m Chris Peterson.
Liz: I’m Liz Bottner.
MOe: And I’m MOe Carpenter.
Chris: Have a good week, and thanks for listening.
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