Step 5: How Do I Manage My Account?
Understanding How to Manage an ABLE Account
ABLE accounts are a unique savings and investment vehicle for individuals with disabilities and their families. They allow eligible individuals to build assets through savings and investments to help them reach their financial goals. ABLE accounts allow for significant amounts of money to be put into a tax-advantage savings and investment account without affecting eligibility for means-tested programs such as Supplemental Security Income (SSI) or Medicaid.
It is important to note that the funds contributed into an ABLE account can be invested in a range of different options. These options vary based on risk tolerance and may be different from program to program. This allows account owners to build or in some circumstances, lose assets based on the performance of their investment choices. ABLE account owners do not need to put all their funds in just one investment choice (although they can).
Additionally, it is important to understand that each investment choice is typically associated with its own asset-based fee. ABLE account owners can change their investment options up to two times per calendar year. Lastly, many state ABLE programs also offer what is called an “FDIC-insured savings account.” These account options offer risk-free savings, as opposed to the various investment options which could vary in terms of gains and losses.
Topics at a Glance
Will I be asked to choose an investment option when I open my ABLE account?
Most ABLE programs will ask you to choose an investment option (or combination of investment options) when opening your ABLE account.
Will there be a variety of investment options to choose from?
ABLE programs offer a range of different investment options that vary in terms of risk. Additionally, different ABLE programs may offer a different number of investment options However, most offer less than 10.
Once I choose an investment option, am I allowed to change where my ABLE funds are being invested?
Yes, an ABLE account owner may change investment options up to two times per tax year. The final regulations clarified that moving funds from an investment fund into a cash fund to process a distribution is not a change in investment direction nor is the automatic rebalancing of assets to maintain a particular asset allocation.
If I do not feel comfortable investing my ABLE funds, do I have other options?
Yes, many programs offer an FDIC insured option. This option shields the funds from any potential losses (or gains) that may be associated with the other options.
- When opening an ABLE account, you will likely be asked to choose an investment option offered by your ABLE program of choice.
- You can change your investment options up to two times per tax year.
- Investments offered by ABLE programs vary in terms of risk and may offer a FDIC insured option.
Many ABLE account holders reach out to the ABLE National Resource Center and express uneasiness with many financial terms involved in opening and managing an ABLE account. This webinar is designed to clarify many key terms so that ABLE account owners feel empowered to manage their ABLE accounts.