Special Needs Spotlight Webinar Series: When and How to Use an ABLE Account
The law firm Norris McLaughlin, P.A., is pleased to present the Special Needs Spotlight Webinar Series. In the third session, “When and How to Use an ABLE Account,” Shana Siegel, a Member of the firm and Chair of its Elder Care & Special Needs Law Practice Group, was joined once again by Elizabeth McKenna, ChSNC™, CFP®, of Merrill Lynch Wealth Management.
Watch the recording here or read the transcript below:
About ABLE Accounts
Shana Siegel: Thank you for joining us here today and we are going to go ahead and get started. You may want to disable your video. We’re going to be handling any questions via the chatbox and we’re going to be doing that at the end. So, there is no need to raise your hand or do anything like that during the presentation, we’ll address everything at the end. So, thank you for attending today. My name is Shana Siegel. I am the chair of the Elder Law and Special Needs Group here at Norris McLaughlin, and I have with me Elizabeth McKenna who is a Wealth Management Advisor with Merrill Lynch. And Elizabeth will introduce herself in more detail a little bit later.
So, today we want to talk about ABLE accounts. This is the third in our series of webinars and each going into detail more than generally. When you go to these seminars you were—you know—just able to kind of scratch the surface. So, we wanted to really get more in-depth be able to focus on issues and give you all the information that you need to know. And these are all recorded so that you'll have an opportunity if there is something that you missed or you need a refresher, you'll have that ability to re-watch this at any point, and of course, to share it. So anyway, here we are, we’re really going to get into talking about ABLE accounts. So, ABLE accounts are something that is really was offered as a real bonus for families and really as an alternative to a trust, something that was going to kind of save the day. The idea was that it was going to be like a 529 account, you may be familiar with the 529 savings accounts for college— and that this would be an account just like that for children with disabilities to handle disability expenses. It has the same tax advantages and it does have a number of additional bonuses in that the assets that are in there are exempt for SSI and Medicaid purposes up to a certain limit—and we’ll discuss that in more detail. So, there was a great deal of enthusiasm when ABLE accounts were first introduced that, you know, this was going to be an alternative to trust, that this was going to be easier and avoid the need for a special needs trust. Unfortunately, it hasn’t really quite lived up to that expectation, but it's still is a really good tool and has some very specific, very useful options for you—and we want to really get into those in detail, so you understand. I like to think of this as just one of the tools in my tool belt. So, I have clients who need a first-party trust, a third-party trust, an ABLE account, it just really depends on the particular family situation and what assets we're trying to deal with.
One of the things that the ABLE account has been heralded for, and which is true, is the promise of personal autonomy because it is something that can be managed by the individual with the disability if they do have the ability to that. Why didn’t it live up to everything that we all expected it to be? Well, that really came in the legislative process. The original proposal was changed dramatically, and the big change came in requiring a payback for the account—and we’re going to talk about that in more detail. But that's really where, you know, some of the modifications really made it, so the account is not quite as useful as we would have liked.
So, first, let’s talk about eligibility. So, in order to have an ABLE account, you must have been disabled prior to age 26, and be able to show that, either by having the eligibility for SSI or SSDI before that age or showing that you met the criteria, which is marked and severe functional limitation expected to continue for a year or more, which is the criteria for disability for SSI or SSDI. And you need to show that with a physician's diagnosis. So, even if you aren’t on benefits, if you're able to show that you met that disability functional limitation, then you would be able to show that you can have an ABLE account. So, this is the legislation, the Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014. One of the nice things about the account is that any person can contribute, so this can be a mixture of first-party refunds and third-party funds. It's the individual who’s disabled own assets, or it could be assets they come from any number of other sources. But here's where we have the real limitation: annual contributions are limited to the gift exclusion amounts—so, that’s $15,000. So, this isn't something that you're going to be able to put a large gift in, you know, grandma wants to make a, you know, a large bequest in her will. That’s not going to be able to happen directly into an ABLE account. So that really limits it because if you’re only having $15,000 a year to be able to place into it, then you're probably not talking about this as the primary source of, you know, funding the lifestyle of the individual with a disability into their, you know, throughout their lifetime. So, we often find that, while an ABLE account is very, very useful—and we’re going to talk about all its uses—it’s not really replacing a special needs trust, it’s working alongside one in many situations. Now, of course, there are going to be situations where all you need is an ABLE account, and we’ll talk about those too. Now, when I mentioned the $15,000 limit, that is from all sources except for the earnings of the individual with a disability—and we will talk about that as well because that was a change that was made later on. In order to have the funds in the ABLE account be exempt, you can have up to $100,000 in it. When the account goes over $100,000, at that point, the funds over $100,000 are going to count for SSI eligibility. So, you want to be mindful of that limit.
Medicaid, if you're on Medicaid and not SSI, then you have a much higher limit. So, you could have funds in your ABLE account up to what the 529 college account maximum is, and in New Jersey, this is at $305,000. So, depending on which benefits you are, you’re going to be able to allow this account to grow to a much larger extent. Now, one of the really important things about an ABLE account is these distributions. Now they are called qualified disability expenses and it's important to fall within these, because if you do something that falls outside of these, then you're going to face a penalty. So, if I have $100,000 in my ABLE account and I decide—well, I really need to take money out of it, and I want to use it for something that's not on this list, I’m going to pay a penalty on that and I’m not going to get the tax benefit that I otherwise would have had. However, if you look at the expense list it’s very, very broad. So, were looking at things that wouldn't necessarily be considered a disability expense, we’re looking at a special needs trust or something that has much more limited parameters, and so the nice thing about that is that work going to be able to use the ABLE funds for things that we wouldn't otherwise be able to use a special needs trust for. So that’s, you know, an important thing to think about when you're thinking about funding an ABLE account.
So, in 2017, as part of the Tax Cuts and Jobs Act, there were some amendments to the ABLE account, and these were really, really quite important. The first one is one that I actually miss the opportunity to use. So, many people will have a regular 529 for their family member and then that family member becomes disabled or, at the time they didn't know whether their child was going to go to college, and so they funded a 529 account, and now they want to be able to use those funds for disability expenses. I had this scenario in my own family. It used to be that if you took money out of the 529 there was no place to put it, you would have to, if you weren’t using it for qualified college expenses, then you were going to pay the 10% penalty. But now, you can actually roll the funds over into an ABLE account, and that can be for that same individual as I was describing, but also for a family member. So, if you have unused 529 funds, you can roll them over and be able to use them for another individual. But I find mostly this is useful when you're looking at using them for the same individual because you're ending up choosing to do another type of program, perhaps a supported living program or pre-college program, rather than looking at college. And so this will avoid that tax penalty. The Able to Work Act is really been wonderful for families, I know because it allows a higher contribution limit for the beneficiaries who’s working. So, instead of having an individual just being stuck within that $15,000 per year, on top of that, they can have their own earnings into the ABLE account. And that can be really important—as we’ll talk in the future—for people who are earning money, but they are, you know, on public benefits, so they’re in a situation where they need to keep their assets in their own name quite low. So, this is an opportunity to be able to save those funds for use and needs in the future.
So, why should you think about an ABLE account? Well, there are a lot of advantages. You know, having the tax-free interest is obviously very important, and we also have withdrawals for qualified expenses that are not taxed. So, you could see a situation where, if you do have funding this, of course, you’re going to have to fund it over time, so it’s $15,000 a year, but over time that’s going to add up, and then it's going to earn interest tax-free. There's also some potential tax planning benefits for the family members. So, if you are in a situation where you're concerned about your own potential estate tax, you’ll want to bring your estate down. So, you might have grandparents or someone who is in that situation and they're doing regular gifting, well they can make gifts to the ABLE account. Whereas sometimes when we’re talking about parents and they’re considering funding a special needs trust, often that’s not going to be a separate taxable vehicle, it's not going to be considered a completed gift, so you're not necessarily achieving your tax planning benefit. So, that’s something to really consider if you do fall in that category where you’re trying to do some gifting to bring your estate down.
Some of the major advantages that the ABLE account has relate to how the expenditures can be used. So, even where we’re talking about first-party funds here—so, if an individual with a disability has their own assets, they’re are placing their own assets into the trust—there's not going to be the rule about the use for the sole benefit that you would otherwise have when you’re looking at first-party funds. So, we might have an ABLE account being able to be used for vacation or something that is going to provide a benefit to other family members without having to get into the details of having the other family members contributing. So, we want to just, you know, you want to be cautious that it’s still going to meet the qualified disability expense rules, but you may have more leeway here than you’re going to have under some of the special needs trusts. And I think that that's an important thing to discuss with your attorney just to make sure that, you know, you're in that right area that you are not going have a problem meeting the qualify disability expenses.
The next piece is when you're working with a first-party special needs trust, you’re probably aware if you have that trust, that Medicaid has to be notified, the language of the statute says, of any expenditures over $5,000. However, New Jersey Medicaid takes the position that this is not a notification, it is approval and, they have the ability to veto certain expenditures from a first-party trust. We don't have a medical necessity test here at all with an ABLE account. So, if you were going to make an expenditure that’s going to be more than $5000 and the funds are in the ABLE account, you don’t have to consider whether Medicaid might think, you know, well I’ve had situations where they challenge, should I have gotten a less expensive car or maybe I didn’t need to put in a pool, I could just have a gym membership, things like that, these are real examples that I’ve had where Medicaid has challenged expenditures from a first-party trust, and we don't see that the ABLE account. So, that might be something to consider if you’re having difficulty with Medicaid approving some of your expenditures.
We don't have medical necessity test here. So again, we do have to fit into those qualifications of being a qualified disability expense, but we don't have to have a situation where it's determined to be medically necessary, the particular service that you’re looking to spend the funds on. And one of the things that I think is particularly important, and we’ll really see that we get into some examples, is that there's no in-kind support and maintenance impact. So, what does that mean? So, if I am going to spend money on rent from a trust, so from a special needs trust, or I as a parent am going to pay for rent or food or shelter, either for my family member and they are on SSI, then they are getting what we call in-kind support and maintenance. So, I am essentially supporting them by paying for their food or shelter costs, and so their SSI is reduced. There's a one-third reduction in their SSI as a result of paying for those things. Here, if those funds come from an ABLE account, we do not see that reduction for SSI purposes. So, if I paid for it out of a trust, my child's SSI will go down; if I paid for myself, my child SSI would go down; but if I put the funds into an ABLE account and ABLE paid for it, then there is no reduction. So, that's pretty powerful.
So, what are the disadvantages? Why shouldn't every person necessarily put all of the funds for their child into an ABLE account? Well, first of all, as we talked about, you probably can't because it's only $15,000 a year. But, the really big issue is that payback. So, normally we only have payback to the state Medicaid services or DDD services if we have first-party funds. Right? So, if my child inherits directly funds or otherwise get funds directly in his own name, then that's a situation where, if I put those into a trust, there's going to be payback on that trust—Okay. So, if he wins a lawsuit or if he gets a gift directly, and we then put those into a trust—that would be a first-party trust—there is a payback provision. For third-party monies there's no payback provision, for a trust—right? So, if I decide to do a trust for my child, and I put that money in, then there's no payback. And that’s what we want—right? We don’t want to have to have a payback. We don't want these funds to have to go to someone else because we don't know if our child is going to use all of these funds up. So, we want them to be able to go on to additional children, or family members, or charities, or whomever we desire. With an ABLE account, we do have a payback even when we have third-party funds. So, we don't necessarily want to overfund this ABLE account because, in the end, we know those funds are going to go to the state—right? So, it may make sense to have a third-party trust where we have some funds for a family member, and then also have an ABLE account that we know is going to be depleted or at least not likely to have substantial, very substantial funds, in the event that our child passes away. Now, an interesting thing is that the payback here applies to benefits that our child received after the trust was created. So, we're talking about a situation where if we don't create an ABLE account until later in life, let’s say, when our child is working or there is an inheritance that comes in much later in our child's life, it is not a payback like a first-party trust, where it’s for their whole lifetime. So, that is a distinction there.
We talked about, again, I’ll reiterate the biggest limitation is that annual limit—right? So, if you're adding to it $15,000 a year, you know, we’re not talking about huge amounts of money—at least, until you come over a large period of time. And again, if we do use it for something that is a non-qualified expense, the list is very broad, but if you use it for something that’s nonqualified then it is going to be income taxable, and there is going to be a penalty there. Now, a thing to point out though, the entire amount isn't taxable. So, if I were to take out a large distribution, it’s only the income portion of that, that is taxable. So, you know, you might want to speak with your accountant or an attorney to really figure out what that might be if there is a reason that you do need to take money out. Okay, I’m going to turn it over to Beth and she’s going to go into more details for us.
The Mechanics of ABLE Accounts
Beth McKenna: Good afternoon, everybody. My name is Beth McKenna. I’m a Wealth Management Advisor, a Certified Financial Planner, and a Chartered Special Needs Consultant. I have my practice with Merrill Lynch in Florham Park. And, like Shana, I also have a child with special needs, so I have firsthand experience in this area. I’m going to focus today on basically what these accounts are, how they work, and what are the types of investments we can have inside them.
So, the mechanics: Unlike trusts—and I consider this is a huge advantage—the ABLE account is actually owned by the beneficiary. This greatly increases the autonomy of a person with special needs, which I think is a terrific benefit. However, it can be created by a power of attorney or guardian on behalf of a person with special needs. Also, unlike trusts, cash contributions, are acceptable, so that it can be used for smaller cash gifts that are given to you child by other loved ones. Now, next, I’m going to discuss the New Jersey ABLE account. So, next slide on this one.
The New Jersey ABLE allows withdrawals online. It also has a debit card or a check option, which makes it extremely flexible to use. It provides six investment options including Black Rock, Schwab and Vanguard, mutual funds, and ETF's in the target risk options. Now, the target risk options are very similar to the 529 age-based options you might be familiar with. Any range from actually an all money market option, and then conservative through to aggressive in stock exposure. Sally Mae bank provides a high-yield savings account on a target risk option, which is the FDIC-insured option on these targeted risk accounts. The all money market option, however, is provided by Fidelity Investments and is Fidelity's money market government portfolio. This is considered low risk, but it's not FDIC insured. And the SEC 7-day yield on it is currently .12%, so very low. I encourage you all to take a look at the website www.able–now.com to look at the high quality, low-cost options there. Establishing an account is very easily done online. So, aside from the New Jersey ABLE, like 529s, you’re not obligated to use the ABLE plan from your own state, I want to be clear on that. So, we’re going to look at two of the highest quality options available to you.
So, the Ohio STABLE was actually the first ABLE that was established and it’s open to every state. Since this was the first, I recommended this most often to my clients. The New Jersey ABLE actually came online in mid-2018. So, a debit card is allowed on this one, and also, Vanguard provides all five of the investment options, which includes an FDIC insured option. The Massachusetts Attainable Savings Plan, on that, you can have a debit card when you open Fidelity cash management account. You can also get text alert on debit card usage. I think that’s very helpful and very useful if you're monitoring card usage for your loved one with special needs. And then finally, there are eight investment options through Fidelity on this one. Again, all these options have very user-friendly websites with much information available to help you establish accounts and choose investment options, as well as excellent low-cost investment alternatives. And they also help you to determine eligibility. I highly recommend that you visit the sites and use the provider that’s best for you. If you check out all those options that are available other than these two—there’s many other options that are available throughout the states—and you can look at this website, which is www.ablenrc.org.
Shana Siegel, Esq.: Great. Thank you.
Beth McKenna: Sure.
ABLE Account Review
Shana Siegel: One thing that I would mention about—we've mentioned a couple of times about a debit account, and I just wanted to address that you do be careful with a debit account if your child is on benefits, because you want to make sure that the option that you use doesn't allow cash to come out if that’s going to be problematic for your child's public benefits. The Ohio plan, the way the debit card works, it does not allow cash and it has an option to limit the vendors. So, you can really address that issue in terms of not being able to pay for not being able to access cash or being able to pay for things that would be for food. So, that's just something to think about if you're considering these options.
So, when we think about the issue of payback, payback to the state for benefits that they have provided, again, we have different rules depending on what the various options are. The various vehicles are, I’m sorry, in terms of whether or not you have a payback and when payback comes into play. So, this might be something for you to work with an attorney on or with your financial advisor on, in terms of where the funds should be, where the funds should go, depending on what the funds are, how much we’re talking about, and when we expect them to be used.
So, just to kind of review: A first-party trust, the funds in it are subject of payback for benefits that your child received during their entire lifetime. Whereas, assets that are in the child's own name, so, for instance, a home, is going to be subject to payback for benefits received after age 55. An ABLE account is subject to payback for benefits received after creation of the account. So, you know, that might be something to take into consideration. Do I want to: a) either wait to create an ABLE account or; b) if I am looking at, you know, my child did not receive benefits until later in life, then maybe I'm okay with having funds in an ABLE that was created as opposed to a first party. So, it's just something to think about. And also, to consider whether or not you might move assets between these different vehicles, if allowable, in order to minimize that payback. Another thing to consider in addressing the issue of payback is whether you are able to if you do have substantial funds in an ABLE account, whether it could be transferred to another individual. I have families that have more than one family member with a disability. With a college 529 account, you can transfer a balance that you’re not going to be using for that beneficiary to a broad list of family members. For an ABLE account, you can only transfer it to another sibling if that individual also meets disability criteria. So, if you have two children with disabilities you could move those assets between ABLE accounts, and that might be a way to avoid a payback on that first child's account, and move it into an ABLE account for a child who might have ongoing expenses.
So, as I mentioned, we really need to think about where the assets should be parked depending on how much the money is and how where we’re going to be using these funds. Similarly, when we’re paying expenses, sometimes it might be advantageous to pay it out of the ABLE account as opposed to paying it out of, let's say, a third-party trust. That might be because of trying to spend down the ABLE account—we want to make sure that there aren’t substantial assets in the ABLE account at the time of your child's passing—or it might be because we are allowed to do certain things with ABLE accounts that we can’t do with other accounts. We can potentially transfer funds back and forth between a trust and an ABLE account. So, we might look at having a continuous gifting program from the third-party trust into the ABLE account. Not of large amounts of money, because obviously we don't want to over-fund it, but of funds that we want to be able to use for things like housing—and we’ll see an example where talked about that. We can only add $15,000 a year. So, we need to think about that in terms of, if we are going to have housing costs over a period of time that we want to fund with the ABLE account, we may need to start funding it several years prior to those expenses—Right? So, you might have a child who is hitting those teen years—you might think about, okay, is this the time that I would want to create an ABLE account so that I can start funding it.
But again, you really only want to do that if you're going to be paying some housing expenses. If that's not going to be the case, then it may not make sense to pre-fund, or at least to not majorly pre-fund an ABLE account. And then there's the issue of, do we hold off on creating the ABLE account, because of the payback considerations. If we don’t need an ABLE account and we’re going to create one much later, then we are only going to have to a payback that’s going to be limited to that later period. So, it's all going to really depend on your situation. I think this is something that, if you're really going to trying and maximize the use of this, then in this way dealing with payback and paying for certain expenses, that would be something that you would really want to work through with your financial advisor and/or your attorney.
All right. So, you’re still a little confused. You're not sure if you need an ABLE account, and when might be the best time to open one up. So, I find the really the best place to use an ABLE account is, they’re wonderful for a small inheritance. Your child inherits $20,000; it doesn't make sense to create a trust for $20,000. Or there's a small settlement—Right. There was a lawsuit and you're coming into $20,000 or $30,000. Again, perfect use of an ABLE account, especially if you don't already have or anticipate having a trust. So, instead of creating the first-party trust in that situation, you can create an ABLE account and fund it that way.
A lot of children have assets from their childhood, and then when you're hitting age 18, you're looking at needing to spend those down in order to become eligible for SSI. So, those assets, sometimes you have, they’re not that substantial, you can buy a computer, you can do, you know, whatever things you need for your child, education that you're going to be spending those things, but sometimes that is difficult to do quickly. And so, an ABLE account is one way to move those assets in and out of the individual’s name and be able to have this account, you’re not forced to rush to spend these things so your child can be eligible for SSI.
Earnings accumulations. So, this is, I think, a really wonderful thing, especially with the change in the law now, where you have somebody who is earning their own money and they are concerned about being pushed over their beneficiary limit—and we’re actually going to talk about this in an example in a minute.
Maintenance or alimony payments. So, if you as the individual who is disabled or receiving alimony, and it’s less than $15,000 a year, it can go into an ABLE account. We are not quite clear on whether child support can go into an ABLE account and that's because the Social Security rulings on this have been a little bit unclear. Then another really wonderful use of the ABLE account is for individuals who are able to manage some of their own funds, and they really get a sense of autonomy here in being able to be owning this and being able to have a debit card and control it. So, if that is appropriate for your family member, you know, it really can make a huge difference in making them feel very independent and really allowing them to be independent.
Many times individuals who are working are saving for larger purchases, so maybe they’re looking to purchase a car or even a home or, you know, that first month’s rent, so they want to be able to save those assets, but of course, if they’re on means-tested benefits, they can’t have more than $2,000 in their account. So, this is a great place to be able to save for those purchases. And then again, we talked about the food and shelter issue and avoiding that one-third reduction. I’m going to let Beth lead us through some examples of these.
ABLE Account Examples
Beth McKenna: Sure. So, here we have Johnny. He’s a 10-year-old with special needs and he receives from his grandma, who loved him so much, a $60,000 bequest. Grandma, fortunately, knew that there was a third-party special needs trust—or either that or created one herself for the purpose. So, we have that. But Johnny’s parents decide that an ABLE is better suited for his needs, so they transfer $15,000 a year, the limit, from the trust into an ABLE account over four years. So these actions, that are created on Johnny's behalf, created the following benefits: Interest and dividends earned are tax-free versus taxable in a trust; there is no tax on the qualified withdrawals, of course, simplicity of the use, it’s so simple to use, it’s much less expensive than having to maintain that trust; and finally, the use of the funds, as Shana has gone over, is so broad. You can use it for health, education, maintenance, and support on very broad versus only supplemental needs in a trust. So, the ABLE can be used—we’ve gone into it extensively—can be used for food, can be used for rent. Really any need, almost any need of the child. So, very flexible. We’ve created a situation where we had a third-party trust with supplemental needs only to an ABLE account. Much broader use for Johnny throughout his life.
Next, we have Susan, who is 26 and she’s able to work, but she relies on her Medicaid and DDD benefits. Her total assets—very important—must remain at less than $2,000 a month in order to preserve those benefits. But she makes too much to spend down the assets to under $2,000 every month. Big problem because you really have to keep it down. At the end of every month, it has to be under $2,000 in order to make sure that those benefits are maintained. So, the solution here is to fund the ABLE account with a monthly amount designed to keep those assets held in her name under the $2000. So, the account owner is the only person who can contribute the funds above the $15,000 limit, as Shana went into before. The additional amount depends on gross income and it’s up to the federal poverty line, which is $12,760 in 2020. So, it greatly increases the amount that we can get into an ABLE account per year. The ABLE account owners who contribute their own money may be eligible—so you have to check this—may be eligible for the Retirement Savings Contribution Tax Credit. Again, you have to check with your advisor on that for more details that pertain to your loved one. And then finally, the money is saved for future needs, incentivizes people with special needs to work, and really, I think, greatly increases the quality of life because they feel empowered by using this benefit.
And then finally, we’ll talk about Michael. So, Michael is 24, that’s my son’s name also. Michael is 24 and he wants to get his own apartment. He receives SSI which is not enough to cover the rent and other expenses in his town, an expensive town, and his parents are willing to pay that rent for up to $1200 a month. So, contributing the money, as opposed to paying it themselves, if they contribute money into the ABLE account each month, and then the ABLE account is used to pay the rent, that eliminates the in-kind support and maintenance reduction, which as Shana mentioned, is one-third reduction of the SSI payment. Now, this can continue beyond the parents’ lifetime through the third-party special needs trust funding, an ABLE account in the same way. Over Michael's lifetime, that could add up to over $175,000 in benefits saved.
So, finally, we’ve come to the end of our presentation. We're so happy to you were able to take the time out from your day to learn about more of the advantages of ABLE accounts for your loved ones with special needs. Now we’re going to open it up to questions. You just use the chat for that purpose.
Shana Siegel: Okay. Looks like we don’t have any questions right now, but certainly, we’ll keep this open for a minute and we’ll see if any other questions come in. In the meantime, you can certainly reach out to myself or to Beth directly. And as I mentioned before, we will have this recording available and you can share it with friends or family members or watch it again yourself. So, here we have a question:
Can the economic stimulus payment be added to an ABLE account?
Shana Siegel: That is an excellent question because I know that a lot of people are concerned about what they should do with that money that has come in and whether it’s a problem for SSI purposes. So, first I want to address a question that you didn't ask, which is, is it a problem for SSI and Medicaid purposes. And it actually, the money, there's a little bit of extra time that you have. You are actually able to have a full year to spend that money before it would be an issue for purposes of SSI and Medicaid. However, if you do not want to spend that money and you want to make sure, you know, that you don't hit any problems because, even though we know that that's the rule, not all the caseworkers necessarily know that that's the rule. So, if you want to be safe, we might want to do that, and go ahead and pull that money out and put it into an ABLE account. And yes, you can certainly put that money into an ABLE account.
We have another question about a deadline for creating an ABLE extends to the 2019 tax filing deadline.
Beth McKenna: I will just chime in there because your ABLE contributions, they wouldn’t be taxed—well, they could be tax-deductible, that’s true. I’m not totally sure about the tax deadline if that’s an issue with the ABLE. Please give us your—get your name to us and we will have your question answered for you, okay.
Shana Siegel: Yeah. We will follow-up.
Can you put money into both your son’s trust and your ABLE account?
Beth McKenna: Yes. Absolutely. So, often people will do that. They will have some money that is in one account and then in a trust. They might have a more substantial amount of money in a trust, and then they fund an ABLE account with the smaller amount of money in order to use it for maybe some of those broader ranges of expenses that we talked about. So, that's certainly something that you would do. And again, when you're putting money into a trust, you can put as much money as you want. There are certainly people that have trusts with, you know, very large balances. But for the ABLE account, it’s that $15,000 per year and then there isn't a limit on how much money can be in the account except, of course, for purposes of public benefits. So, if you have $120,000 in the account, that $20,000 amount over $100,000 is going to be a problem if your child is on SSI—Right? And then if you spend that and then you are able to get your child back on to SSI if you spend it back down to the $100,000 level.
Shana Siegel: Okay. Well, thank you, everyone.
Beth McKenna: And if you have any other questions don't hesitate to contact us, okay. Have a wonderful day.
Shana Siegel: Thank you, and we’ll send out a flyer for the next webinar. Have a good day.
Beth McKenna: Bye now.
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