ABLE Accounts in Massachusetts: A Savings Plan for Disabled People

The Massachusetts ABLE Program, also known as the Attainable Resources Plan, provides your loved one authority over their savings while maintaining their eligibility for government services.

ABLE accounts are bank accounts that enable persons with special needs to save money while still receiving disability payments. The federal ABLE (Achieving a Better Life Experience) Act inspired ABLE accounts, however they are formed and administered at the state level.

Most states offer ABLE programs, with somewhat varied laws and processes for creating and utilizing an ABLE account in each state.

The Attainable Savings Plan is the name of the Massachusetts ABLE Program. Residents and nonresidents may participate in the program, and Massachusetts residents can form ABLE accounts in other states that allow it. More

information is provided below.

Save Money Without Being Punished

People with special needs must demonstrate that they do not have enough money to maintain themselves independently when applying for disability payments. Any money in a typical bank account counts against a person’s eligibility for disability payments.

As a consequence, persons with special needs are unable to save money that they earn or acquire via inheritance or gifts. On a daily level, this implies that persons with special needs must live on very little money in order to get government assistance.

One solution to this problem is to utilize a special needs trust, which gives a location to preserve money for the benefit of the person with special needs (without affecting his or her eligibility for benefits). Special needs trusts, on the other hand, must be governed by a trustee, not the individual with special needs who benefits from the trust. This gives persons with exceptional needs little financial power and inhibits their freedom.

ABLE accounts cover this need by allowing persons with special needs to manage a small bank account without jeopardizing their eligibility for SSI, Medicaid, or other government assistance.

Federal ABLE Account Regulations

The federal ABLE Act establishes the fundamental guidelines for all ABLE accounts. (The federal act may be found at https://www.congress.gov/bill/113th-congress/house-bill/647/.) When states approve and execute the ABLE Act, they must follow federal guidelines while also adding their own. Here are a few examples of federal regulations:

Qualifications due to disability To be eligible for an ABLE account, a person must have a debilitating condition that started before the age of 26.
There is just one account. Each individual may only have one ABLE account.
Anyone may deposit funds into the account. Anyone, even the owner with a handicap, may contribute to an ABLE account.
Contributions are yearly limited. The 2022 limit is $16,000.
Many people limit their accounts at $100,000. The amount of an ABLE account cannot exceed $100,000 for persons who qualify for SSI. See the state regulation, below, for people who do not qualify for SSI.
The use of money is restricted. Funds in an ABLE account must be used for Qualified Disability Expenses (QDE)—expenses “connected to the account holder’s blindness or disability.”
If utilized appropriately, account money are not taxed. Income generated from ABLE account money is not taxed. Contributions are paid after-tax money, and QDE dividends are tax-free.
Medicaid is paid using unused monies. When a disabled person dies, any assets left in an ABLE account are used to pay Medicaid for services provided by that program.

Learn more about the federal regulations governing ABLE Bank Accounts.

When individual states enact the ABLE Act and establish ABLE accounts for its inhabitants, they may additionally establish regulations and procedures concerning:

Minimum deposits are needed to start an account.
Fees
Accounts are available to non-residents.
Contribution deductions in state income taxes
Account transfers
Credit cards
Portfolios of investments

ABLE Accounts in Massachusetts are Attainable Savings Plans.

The Attainable Savings Plan is the name of Massachusetts’ ABLE account program. Here are some specifics.

Attainable Savings Plan is a common name.
URL: https://www.mefa.org/save/able-account/
Massachusetts General Laws Ann 15C 29
Fidelity Investments is the program manager. https://www.fidelity.com/able/attainable/overview
Fidelity is a financial institution.
Account limit: $500,000 (although if your account surpasses $100,000, you may lose your SSI eligibility).
Out-of-state residents are welcome: Yes
The following is the minimum amount required to start an account: There are no debit or prepaid cards available: Yes
Investment alternatives: There are eight investment options ranging in risk from 100% short-term investments to 85% equities and 15% bonds.
Investment costs vary depending on your investment portfolio. Fees vary from 0.29% and 0.88% of assets.
Annual charges: There are no annual charges.

Unlike many other states’ ABLE programs, Attainable Savings Plans are not FDIC-insured.

In addition to the $16,000 yearly commitment, if you are working, you may contribute up to $12,880 (in 2022) of your annual gross earnings to your Attainable Savings Plan, for a total annual contribution of $28,880.

If you spend your account money on anything that isn’t a Qualified Disability Expense, you may have to pay income taxes as well as a 10% extra federal penalty tax on any profits.