ABLE Account Decision Guide Series

Managing Your ABLE Account

Knowing how to manage money in your ABLE account will help the account to grow tax-free to best support you in achieving your goals and dreams. In order to make the most out of your ABLE account, it will be helpful to apply the basics of money management so that you can choose the types of savings options and investments that best fit your needs and goals.

Managing your money – whether in your ABLE account or another savings or investment account – requires building financial skills, Making Smart Financial Decisions, developing goals for your life and finances, putting a plan to achieve those goals into action and being committed to saving.

Smart money habits include controlling spending, eliminating impulse buys, not living beyond your financial means and reviewing and focusing on your goals over time to see if you need to make any changes. If you decide that you need help to keep on track, the ABLE National Resource Center (ABLE NRC) has tips and choices for you to consider. The more you make good money habits a part of your daily life, the easier it will be to meet or exceed your goals and enhance your financial health, independence and quality of life.

As you move forward through the “Managing Your ABLE Account” Decision Guide, you will find tips and tools that are both general to good money management and specific to ABLE account management. It is our hope that providing information that covers both money management and ABLE account management will ensure you make the most of your ABLE account.

Choose one or more of the following categories for additional information:

  • Once your ABLE account is opened, setting your savings goals is an important step to achieving financial well-being and maximizing the benefits of being an ABLE account owner. There are two things you can do now:
    1. Find tools to learn more about setting personalized financial goals, for example, the STAR Goal Setting Worksheet or:
    2. Sign up for online financial wellness training or financial counseling and coaching. These tools can help you to put your goals into action, plan for life events and save for large purchases.
  • Free financial wellness training or financial counseling will help you learn good money habits and to save regularly. You can also learn about investing. Good money habits will help you gain the confidence to make smarter everyday financial decisions.
  • The resources can help you to prepare a spending plan that includes making regular deposits into an ABLE account. In addition, you can sort out what income will be used to pay for monthly expenses, what ABLE funds will be used to pay for qualified disability expenses (QDEs) and what ABLE funds will be saved for financial emergencies or for the future.
    • If you receive Supplemental Security Income (SSI) from the Social Security Administration (SSA), it is also important to follow their rules for beneficiaries. For example, SSI needs to pay for housing and food, both qualified disability expenses, with any extra SSI saved in an ABLE account. ABLE funds may help pay for additional housing expenses. (Tips: Remember that housing expenses must be paid in the month the money is withdrawn or it counts as a resource if held and paid the following month).
    • Although SSA monthly payments may be directly deposited into an ABLE account, it is not recommended because each state has deposit “hold” rules and the money may not be available if you need it quickly. Ask your ABLE plan about their “hold” rules.
  • To learn more about finances and managing money, there are several free recommended resources: National Disability Institute's (NDI) Financial Wellness Tools and Bank of America's Better Money Habits.
  • You may also want to check out Hands on Banking for students, families and educators. NDI also offers free financial education through LifeCents; free virtual coaching or counseling services are also available.
If you need help in setting or in meeting savings goals, a circle of support may be helpful. A circle of support is an informal team of people which agree to work together to help you. They may include trusted family members, close friends, your employer, a job coach or others that you select. YOU make the final decisions and you are in charge! The circle can help you plan to make your dreams come to life and help guide you to your goals. These supports are often part of Supported Decision Making (SDM) which is an alternative to guardianship and conservatorship. SDM allows people with disabilities to make choices with less restrictions than guardianship and conservatorship. The SDM team can help clarify ideas and dreams in specific areas and help to set goals. They will motivate you and reinforce good savings behavior to help you reach those goals. A local Supportive Decision Making representative can help guide you to success.
  • An authorized legal representative (ALR) is another term used for the parent of a minor, a legal guardian or someone who holds a power of attorney (POA) on an ABLE account. Each ABLE program describes its requirements for an ALR in their ABLE plan disclosure document which can be found on the ABLE NRC website in the plan you selected by scrolling down to the document link. It contains detailed information on ALR and POA. Many state ABLE plans have a form for limited POA available on their website. The ABLE plan can guide you in completing the form and having it notarized. Some POAs include a termination date while others do not, so it is important to periodically revisit the POA and consider whether or not a POA still meets your needs.
  • Some plans allow an “entity ALR” which is a nonprofit agency which supports the account owner. An ALR, including an entity ALR, cannot have any interest in the account during the account owner’s lifetime and must administer the account for the benefit of the account owner.
  • When you are an adult account owner who does not have a legal guardian, and you want or need formal assistance which legally gives one or more people various levels of access to your account, you may want to sign a power of attorney (POA). This is helpful if you have difficulty handling responsibilities on your own, difficulty understanding how your ABLE account works and making choices in your account, or if you have a physical or mental disability which may worsen and leave you unable to sign a POA or to manage your ABLE account in the future. If there are questions concerning your capacity or abilities at the time the POA is created, it may be helpful to obtain a doctor’s letter confirming your ability to make this decision. A POA or ALR could do any or all of the following:
    • Get information about your account and receive duplicate account statements;
    • Contribute money to your account and move money among savings and investment options within the account;
    • Withdraw money from your account for qualified disability expenses; or
    • Maintain full control over your account and help you as you learn money management skills.
  • Age 18 is the “age of majority” when a minor child legally becomes an adult in most states. However, there are several exceptions for some children under age 18 and in several states the age of majority is older than age 18. In some states, the person who opened the ABLE account for a minor child retains control of the account after the child turns age 18. Ask your state ABLE plan about the rule in your state.
  • As a minor child nears the age of majority, a parent or family member who has established the ABLE account for their minor child should assess their child’s ability to make financial decisions since the child will automatically be assumed to be capable under most plans if the child does not have a legal guardian. The parent may relinquish control at age 18 (or the “age of majority”) or the ABLE account owner may request a change without the consent of the parent.
  • A parent, who has a child with one or more medical conditions which threatens their child’s decision making ability, may wish to explore establishing the least restrictive tool for preserving their child’s decision making ability: a power of attorney, the supported decision making model or guardianship/conservatorship, as appropriate. The parent may also wish to consider a special needs or pooled trust to supplement the ABLE account. The parent may also wish to begin or continue the process of teaching the person money management skills using resources posted within this Decision Guide.
  • Ability to Budget, Set Goals and Shift Priorities. Along with basic financial skills and the ability to set goals discussed above, it is important to have or to acquire the skills to create a spending plan that helps you decide how much money you need for monthly bills, how much you save for emergencies, how you can pay off debt so that you have good credit and how much you can save in your ABLE account. It is important to be flexible because your goals and plans may shift as your life progresses and as your needs and priorities change. For example, big life changes like a significant change in health, income, a job, having a child, a marriage, divorce or loss of a partner, buying or selling a home, an inheritance, unexpected debt or change in financial goals requires a fresh look at your goals and financial plan.
  • Decision Making Ability. You need the ability to make decisions:
    • To save, invest or both, based upon whether your goals are short-term, long-term or based upon your risk tolerance
    • To look for cost-free alternatives first before using your ABLE savings for qualified disability expenses. If you are unsure where to find cost-free alternatives, the Decision Guide, “Determining Whether Something is a Qualified Disability Expense,” may be helpful.
  • Organizational Skills. So that receipts for qualified disability expense purchases or services paid from your ABLE account are stored in your files for three (3) years.
  • Understanding of Methods of Contribution. Knowledge of how you and others may deposit money into your account is helpful. Each ABLE plan has detailed information about how a person can deposit money into an ABLE account in the plan disclosure document. You can find the disclosure document on the ABLE NRC website by clicking on the state where your account was opened and scrolling down to the link for this document. You can also find your state ABLE plan website by using the same tool. Ways to contribute may vary and include:
    • By check
    • Through an automatic contribution plan
    • By electronic funds transfer
    • By payroll deduction if your employer submits contributions on your behalf
    • Through a rollover or program-to-program transfer from another ABLE program or 529 account education savings account
    • Gift cards such as Gift of Independence or Ugift. Some state ABLE plans may include a special “gifting page” where the account owner can request contributions by sharing email or social media content.
  • Understanding of What May Not Be Contributed. Some state ABLE plans will not accept cash, money orders, traveler’s checks, foreign checks or checks dated more than 180 days prior to receipt. No state ABLE plans accept stocks, bonds, securities, real estate or other non-cash assets.
  • Understanding of Withdrawal Methods and Hold Rules. You need to have an understanding of how withdrawals may be made. Ways to withdraw may include requesting by phone, online or by submitting a withdrawal form from the state ABLE plan. Check with your ABLE plan for more information.
    • Knowledge that withdrawals of contributions, even when made by check or electronic funds transfer, may not be immediately available for withdrawal in some plans for several days. Check with your state ABLE plan for withdrawal hold rules and business day processing.
      • Tip: Although you can have a Social Security benefit directly deposited into the ABLE account, you may not want to do this if you need the funds immediately. You may want to only deposit money left over after paying your monthly expenses.
    • If an ABLE pre-paid debit card is used for withdrawals, the ability to understand and time withdrawals or the transfer of funds for qualified disability expenses to the card when funds are available for use. This is necessary so that a purchase or service may be paid on time.
      • Only withdraw funds that will be used for qualified disability expenses. If money needs to be returned to an ABLE account, it counts towards the annual contribution limit as a new contribution.
      • If you withdraw money from your ABLE account for a non-qualified disability expense, or for a housing expense that you hold over until the following month, it is counted as a resource and may affect continued eligibility for other federal benefit programs.
  • In most state ABLE plans, when you open an ABLE account, you must make a choice to save, invest or both. However, in some plans if you do not choose, the choice is made for you. There are several financial sold plans that only offer investment options and there is at least one state ABLE plan which offers only a checking account. You can change investment choices up to twice per year. It’s beneficial to not delay opening the account while you are making the decision to invest or not. Keep in mind, ABLE investment earnings are not taxable income when the funds are spent on qualified disability expenses. ABLE interest is not countable income for means-tested benefits like Supplemental Security Income or Medicaid.
  • One of the best sources of information is in the state ABLE plan disclosure document for the state in which you have opened an ABLE account. The booklet will give you information on everything you need to know including savings and investment choices and fees. It also includes benefits for its state residents and taxpayers who invest in their state ABLE plan. You can find the disclosure document by clicking on the state where the account was opened and scrolling down to the document link. The document also contains investment earnings data.
  • Saving is the safest route because the dollar amount won’t typically decrease unless you withdraw funds, but interest rates on savings accounts are often lower than the rate of inflation and don’t allow your money to grow quickly. This means that your savings could lose purchasing power over time. People generally use saving for short-term financial goals like a down payment on a car or a goal they can achieve in a short amount of time.
    • The most common savings choices are a savings account or an interest-bearing checking account which may offer Federal Deposit Insurance Corporation, or FDIC, protection. FDIC insures your savings account up to $250,000 per depositor, not per account. FDIC does not insure investments.
    • The Decision Guide, “Finding the Funds to Save in an ABLE Account,” examines key sources of money which can fund an ABLE account.
  • Investing can be beneficial, too. Investing gives your money the chance to grow faster than it could in a savings account. Some people turn to investing to reach long-term goals which take five years or more to achieve. It is tempting to want to invest to receive higher returns and beat inflation, but the value of investments may not always go up and it may sometimes go down. Some people look at the average growth over time. Your state ABLE plan disclosure document will give you more information to help you to make your decision. The MSRB Investor’s Guide, published by the federal Municipal Securities Rulemaking Board (MSRB), which falls under the Securities and Exchange Commission (SEC), is also helpful. The Guide is not a substitute for reviewing the ABLE program disclosure document. You can find the disclosure document by clicking on the state where the account was opened and scrolling down to the document link.
    • If you have a long time to meet your goal, your returns will compound. This means that, in addition to a higher rate of return on investments, your investment earnings will also earn money over time.
    • Investing may not be the best choice if you have a short-term goal you want to meet. In a shorter period of time, investment prices could go down right before you need the money which could leave you in a financial bind. If this happens, you will have to either settle for an option that does not cost as much, delay your goal until you can save more money or until your investments increase in value.
  • The best way to learn about investing is to spend the time to build your knowledge. FINRA has a wide variety of information available to learn to invest. There are courses to learn the basics of how different investments work, the features and risk factors. Key investing concepts are also discussed and savings and other calculators are provided if you need them. None of the courses are specific to ABLE accounts, however, basic information on all types of investments is covered.
  • Both – Save and Invest! You can mix saving and investing when the state plan offers both options! You can save money you absolutely need and invest money that would be nice to have, but is not necessary to meet a short-term goal. You can always invest toward the beginning of a long-term goal and slowly switch to saving as you near the achievement of your goal. This helps avoid a sudden drop in investment values that could delay the goal. Just remember that you can make changes up to twice per calendar year.
  • If you select one or more investment options, you don’t have to have a financial adviser, but you can use one to help you to make choices or include them as part of your circle of support, if you have one. You can find a financial advisor’s background and qualifications by using BrokerCheck.
  • Several state plans have a “financial advisor sold plan,” but most do not. You can find the states with a financial advisor by using the ABLE plan features tool and selecting “Financial Advisor Sold Plan.” The financial advisor sold plans may provide advice about that ABLE program and its investment options, though that should never take the place of reading the disclosure document. When you review the disclosure document, it will give you information on fees which may differ in these plans. The more you pay in fees, the lower the return on your money.
  • One of your most important tasks as an ABLE account owner is to regularly monitor your account. Daily may be too often and yearly may not be often enough. You may want to choose monthly or quarterly unless something else works better for you. Review your short- and long-term goals and your savings and investment choices. Look at your progress to see if you are on track or need to save more to meet your goals. You may want to review your state ABLE plan to see if there have been any changes. Compare it with other plans and look at things important to you such as the interest rate and rates of return, fees, state tax credits or other benefits and options offered in the account. Becoming ABLE Account Ready contains some questions you may wish to keep in mind when comparing ABLE plans.
    • You can have only one ABLE account at a time, so if you find a better plan, you could consider rolling over the funds in your account to another state ABLE program once per year. Be sure to ask whether there is a fee to do this. If you feel overwhelmed, you can ask a financial advisor or other professional to help you, but this is not required. You can also ask a trusted family member, someone in your circle of support or someone who has power of attorney or an ALR on your account.
  • Some ABLE plans may have a “dashboard” to help you manage your activity, prepaid card, money transfers, etc. This may be helpful if you like to see all activity in one place on a website.
    • A dashboard for periodic monitoring can help you to see the performance or growth of your account, even if you are making purchases or contributing to the account regularly. It is also important to remember that investment performance can fluctuate over time.
  • If you receive a benefit which is based on need, you should closely monitor:
    • Your account balance. If you receive Supplemental Security Income benefits, the first $100,000 is not counted by the SSI program, but anything over that is counted as a resource along with any other non-ABLE resources you own. If you exceed your resource limit, which is $2,000 for an individual (adult), your SSI payment, but not your Medicaid, is temporarily suspended until you no longer exceed the resource limit. If your non-ABLE resources alone exceed the limit, your SSI payment and your Medicaid would stop, but could restart within 12 months when you are back under the resource limit.
  • All ABLE account owners should periodically review:
    • Your annual ABLE savings limit. Each state has a limit for the total amount which can be saved in the ABLE account over time. The limit is the same as the 529 college savings account limit in the state where you established your ABLE account. The easiest way to find the limit is to use the Select a State Program comparison tool and click on the state where your account is open. If or when you have reached that limit, you cannot make additional contributions until you make purchases which bring the balance to under the state limit.
    • Your state ABLE plan. If you opened an ABLE account in a state where you do not live, you may want to review your state’s plan from time to time to see if they offer any new features such as new tax credits, lower fees or new investment options.
    • Any changes in your plan. If you rolled over funds from an ABLE plan to another ABLE plan, you can only do so once every 12 months without tax consequences. The new ABLE account must receive funds within 60 days of being withdrawn to avoid taxes. The plans should coordinate and the new plan must also receive a breakdown of contributions and earnings.
    • Your state’s ABLE Medicaid Payback Provision. You may choose to save for large purchases like a vehicle or home in your ABLE account now or take advantage of your ABLE accounts savings as you get older or if your health status changes. You may even use your account to save enough to cover funeral and burial expenses and other end-of-life expenses. Remember, if you are not using Medicaid, there is no Medicaid payback. An ABLE account owner may name a beneficiary for their remaining ABLE funds through the ABLE plan or within their will.


Note: Our ABLE Decision Guide Series is designed as an aid to decision making as it relates to establishing and using an ABLE account. This document does not cover every possible issue related to the topic and is not a substitute to more in-depth analysis that may be required in some cases.