The New 529 ABLE Account

Chip Gerhardt, a father to an 19-year-old young woman with Down’s syndrome, a lobbyist in Ohio and a former chairman to the National Down’s Syndrome Society. Gerhardt has worked to have the 529 ABLE Law enacted, a law that says Ohioans are now able to open STABLE investment accounts, which allow participants to set aside up to $14,000 a year to pay for college, housing and disability related expenses. 

The basic understanding behind ABLE is that federal law, for decades, prevented people who qualified for Social Security or Medicaid, because of the disability, from having more than $2,000 worth of assets or earning more than about $680 a month or they would lose their eligibility for these two very important programs. The ABLE Act was an amendment to the 529-college savings account program that creates a first of its kind savings account instrument for people with disabilities to put money aside in their own name, which is the important distinction here, without losing eligibility for Social Security or Medicaid.

The idea of The ABLE Act was conceived at the kitchen table in Northern Virginia at the home of Steve and Catherine Beck, a couple that have a daughter with Down’s syndrome, and they were talking to some other friends one night about 12 years ago and somebody brought up the issue that you can’t have more than $2,000 or you lose your eligibility and people didn’t really know that. So, a few people started to get involved and then a few more and then the NDSS and then Autism Speaks. This literally was a grassroots effort that certainly had professional management through NDSS and Autism Speaks and others, but it was literally a grassroots effort. It’s very exciting to have been involved with that was passed 25 years ago, but it’s also sort of a statement amount disability rights and advocacy that it took 25 years since ADA to get something like this that many described as a no-brainer. They couldn’t believe that public policy has been in place for 50 years. I mean, it took us 50 years to fix this. The $2,000 asset level was put in place in 1964 and never went up a penny.

So the benefit of the ABLE account is that you can use it for a number of issues that are disability related including education but also healthcare, transportation, assistive technology, workforce development and other issues that are related to your disability. As you pointed out, it also grows tax free like a 529 education account. It’s after tax dollars that go into the account, but the money grows tax free and if you withdraw it for an eligible expense you don’t pay any taxes on the growth and the value of your account. So, for instance, kids without disabilities, if you create your 529 college account the day after your daughter was born and let it grow for 18 years, you could have increased the wealth of that account significantly and the same is true now for the ABLE account. The one difference, or actually big difference, is at some point in the beneficiary’s life, the account holder’s life, that account also can become much more like a checking account.

For instance, my daughter, hopefully, will be independent of her mom and I, and she’ll be able to pay rent from this account, she’ll be able to pay for transportation to and from work, she’ll be able to pay for job training courses or for post-graduate secondary education. She can pay for an aide to help her with disability-related issues so much more like a checking account and so I could see this being utilized as a savings instrument and creating an amount of money that can help that person over the span of his or her life but also an account that is used much more often than withdrawing money once a semester to pay for college for four years.

This is really about economic self-sufficiency and self-determination and providing an opportunity for people who not only want to work but can work, the opportunity to actually work and accept a paycheck and get raises and pay taxes and be – contribute back through paying taxes.

This allows my family, my wife and me and our daughter, to put her in a position so that we take care of her so that you don’t have to because if we can’t do that, you will absolutely have to do that because it’s unlikely that she will ever be able to earn enough money to adequately take care of herself in an meaningful manner without significant public support.

Again, there are many organizations that participated in this effort. The two organizations that really led the charge for these 10 years is Autism Speaksand the National Down Syndrome Society. So, reaching out to one of those two organizations, whether you’re affiliated with another type of organization or not, they can help direct you if you want to be involved in on-going efforts.

We’re not going to stop. I mean, we’ve gained a lot of goodwill. As I said, we’re coming back with ABLE to Work in 2017 and ’18. I’m confident that we’re going to get that passed to further incentivize people to not only work but incentivize employers to find opportunities for people with disabilities to work as well. Another way to learn more about this, you can go to the respective websites of NDSS or Autism Speaks to learn more about the advocacy. If you’re interested in a STABLE account, which is an Ohio account, but again, it’s available to anybody in this country who qualifies, I would encourage them to go to check it out. It’s an easy website to navigate. It’s easy to determine eligibility and if you decide to sign up for one of these accounts, it will take you about 10 minutes.

I am proud not only to have been involved in this but also my family was honored by the fact that our daughter, Anne, opened the very first ABLE account in the entire country through Ohio’s STABLE program. It’s a very exciting opportunity for us. I would encourage people to look at these accounts like a traditional 529 account that most people just decide to open up on their own. It’s important to start growing these assets as quickly as possible and do it as early as possible in the beneficiary’s life, compounded interest and all of that. It grows significantly over time.

If you would like more information on this subject please check out the links below.

STABLE Account Public Service Announcement, featuring Anne Gerhardt

529A Accounts Let Disabled Save Without Risk to Government Aid

Ohio STABLE investment account program for people with disabilities expands.

Cincinnati Woman champions savings accounts for people with disabilities.

ABLE National Resource Center Launches Website