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Contributions

The minimum initial contribution to open an Account is $50, and there is a minimum of $25 for subsequent contributions. Any person (including your friends and family), corporation, trust, or other legal entity may make a contribution to your Account. Contributions to an Account are made with after-tax dollars and are not deductible for federal income tax purposes.

Contributions to an Account from all sources cannot exceed $15,000 per year in calendar year 2018 (unless the expanded contribution for working individuals with disabilities under the Tax Cuts and Jobs Act applies). The maximum lifetime contribution limit is $370,000, though a lower limit of $100,000 generally applies for Supplemental Security Income purposes of determining eligibility to receive government assistance or benefits. See the Program Disclosure Statement for more information.

Contributions can be made using one of the following methods:

  1. by check (excluding starter checks);
  2. through an automatic contribution plan (“ACH”);
  3. by electronic funds transfer (“EFT”);
  4. by payroll deduction (if your employer provides for payroll deduction and agrees to submit contributions on your behalf); or
  5. through a Rollover or Program-to-Program Transfer from another qualified ABLE program or a 529 account.

For your protection, if you choose to make contributions and/or withdrawals via ACH, the Texas ABLE Program will use the micro-deposit method of bank account verification. We will make two random deposits to any bank account that you add. These amounts will be deposited to your bank account. You will be required to confirm the exact amounts of the deposits before you are permitted to use the bank accounts for contributions or withdrawals.

Rollovers into the Texas ABLE Program

A Rollover into the Program is a withdrawal of funds from your account in another qualified ABLE program, and the contribution of those funds within sixty days to your Texas ABLE Program Account (if you have not made a similar transfer within the previous twelve months) or to the Texas ABLE Program Account of a person who is an Eligible Individual and a Member of the Family (which generally includes siblings). To initiate a Rollover, you must first open a Texas ABLE Program Account. The Program does not charge a fee for incoming Rollovers.

Unless the Program receives appropriate documentation showing the actual earnings portion of a Rollover contribution, the entire Rollover amount will be treated as earnings for reporting purposes.

Rollovers may only be made during the lifetime of the Designated Beneficiary. In the case of a Rollover, the ABLE account from which amounts were rolled, or taken from, must be closed by the 60th day after the amount was distributed from the ABLE account. A transfer of funds that does not meet the conditions stated above for Rollovers will constitute a Non-Qualified Withdrawal subject to federal tax on any earnings and the Additional 10% Tax. Also, a Non-Qualified Withdrawal may negatively affect a Designated Beneficiary’s eligibility for federal or state benefits. You should carefully read the Rollovers section of the Program Disclosure Statement for more information as well as the tax consequences.

Effective for distributions after December 22, 2017, and before January 1, 2026, amounts in a 529 account may be rolled over to an ABLE account of the 529 account’s designated beneficiary or a “member of the family” (as defined by IRC 529) of the 529 account’s designated beneficiary. Any rollover from a 529 account to an ABLE account is limited by and will count towards the Annual Contribution Limit. For 2018, this amount is $15,000. To qualify as a rollover, it must be paid to a Texas ABLE Program Account within 60 days after the date of the withdrawal. Please see the offering document from your 529 account administrator for information regarding the tax consequences of Rollovers out of your 529 account.

Note: The revisions to Section 529 of the IRC permitting rollovers to ABLE accounts was passed by U.S. Congress and was signed into law by the President of the United States on December 22, 2017. The information presented is based on a good faith interpretation of the statutory language. If, and when, material updates become available we will update this website and the Program Disclosure Statement. Please consult with your tax advisor for more information.

Program-to-Program Transfers

A qualified Program-to-Program Transfer occurs when you directly transfer the Designated Beneficiary’s entire ABLE account into a new ABLE account in a different state’s qualified ABLE program for that same Designated Beneficiary, without making any intervening distributions or deemed distributions to the Designated Beneficiary between the time the funds are withdrawn from the original account and deposited into the new account. The transferor’s account is closed upon completion of the transfer. A qualified Program-to-Program Transfer also occurs when you directly transfer part or all of an ABLE account into an ABLE account for another Eligible Individual who is a Member of the Family (generally, a sibling), without any intervening distribution or deemed distribution to the Designated Beneficiary. Program-to-Program Transfers may occur into the Program as contributions or out of the Program as withdrawals.

Program-to-Program Transfers may only be made during the lifetime of the Designated Beneficiary. A transfer of funds that does not meet all of the requirements for Program-to-Program Transfers will constitute a Non-Qualified Withdrawal subject to federal income tax on earnings and the Additional 10% Tax, and may negatively affect the Designated Beneficiary’s eligibility for federal and state benefits. You should carefully read the
Program-to-Program Transfer
section of the Program Disclosure Statement for more information.

Contribution Limits

Contributions from all sources can be made up to $15,000 per year per Designated Beneficiary, unless the Work Contributions* described below applies. Contributions over $15,000 will not be accepted (unless the Work Contributions described below applies) and will be returned to the contributor, if possible.

No new contributions may be made to any Account if, at the time of a proposed contribution, the Account balance is equal to or greater than $370,000. Accounts that have reached the Lifetime Account Limit may continue to accrue earnings.

The Program Manager will not knowingly accept attempted contributions that would cause your Account to exceed the annual or lifetime contribution limits (an “Excess Contribution”). If an attempted Excess Contribution is received by the Program, it will be placed in a non-interest-bearing account and refunded automatically to the contributor whenever possible. However, if attempts to obtain any information necessary to refund the attempted Excess Contribution to a contributor other than the Designated Beneficiary are unsuccessful, the refund will be made to the Designated Beneficiary. See the Contributing to Your Account section of the Program Disclosure Statement for more information.

*Work Contributions for Certain Designated Beneficiaries
For contributions made on or after January 1, 2018, and before January 1, 2026, certain Designated Beneficiaries may make excess contributions to an Account above the $15,000 limit (Work Contributions). Such Designated Beneficiaries may annually contribute up to the lesser of (1) the Designated Beneficiary’s compensation includable in the Designated Beneficiary’s gross income for the taxable year, or (2) the poverty line for a one-person household as determined for the preceding taxable year ($12,060 for 2017 and $12,140 for 2018). Although contributions from all sources can be made to an Account up to $15,000 per year per Designated Beneficiary, note that only certain Designated Beneficiaries are permitted to make Work Contributions.

In order to qualify for Work Contributions, the Designated Beneficiary must be an employee (within the meaning of Section 401(c) of the Internal Revenue Code, which includes a definition of self-employed individual) for whom no contributions have been made for the taxable year to: (i) a defined contribution plan that meets the requirements of Sections 401(a) or 403(a) of the Internal Revenue Code, (ii) an annuity contract described in Section 403(b) of the Internal Revenue Code, or (iii) an eligible deferred compensation plan described in Section 457(b) of the Internal Revenue Code. The IRS has clarified that a Designated Beneficiary (or a person acting on behalf of the Designated Beneficiary) is solely responsible for ensuring eligibility for Work Contributions and for maintaining adequate records for this purpose. See the “Expanded Annual Contribution Limit for Certain Designated Beneficiaries” section of the Program Disclosure Statement for more information (note that the Program Disclosure Statement uses the term Expanded Annual Contribution Limit in reference to Work Contributions).

Supplemental Security Income (“SSI”) Limits

The Social Security Administration (“SSA”) has issued guidance on how SSA will treat ABLE accounts for purposes of determining a Designated Beneficiary’s benefit eligibility under SSI. SSA will exclude the following from countable resources:

  • Up to and including $100,000 of the balance of funds, including any earnings, in an ABLE account from the resources of the Designated Beneficiary.
  • Withdrawals for Qualified Disability Expenses other than housing if the withdrawal is retained beyond the month received.

This exclusion applies while:

  1. the Designated Beneficiary maintains, makes contributions to, or receives withdrawals from the ABLE account;
  2. the withdrawal is unspent;
  3. the withdrawal is identifiable; and
  4. the individual still intends to use the withdrawal for non-housing related Qualified Disability Expenses.

This guidance is derived from publicly available sources and is not intended to be exhaustive, and is subject to change by the SSA at any time. For more information on how SSA treats ABLE accounts please see “SI 01130.740 Achieving a Better Life Experience (ABLE) Accounts” in the Program Operations Manual System.

Note, however, that SSA will not deduct contributions from the countable income of the person who makes the contribution. The fact that a person uses his or her income to contribute to an ABLE account does not mean that income is not countable for SSI purposes. For example, a Designated Beneficiary can have contributions automatically deducted from his or her paycheck and deposited into his or her own ABLE account. In this case, the income used to make the ABLE account contribution would still be included in the Designated Beneficiary’s gross wages.

The Program is required to report monthly to SSA on all Account balances and activity. SSA will count the amount by which an Account balance, including any earnings, exceeds $100,000 as a countable resource of the Designated Beneficiary. A special rule applies when the balance of an SSI recipient’s ABLE account exceeds $100,000 by an amount that causes the recipient to exceed the SSI resource limit–whether alone or in combination with other resources. When this happens, the recipient is put into a special SSI suspension period where:

  • SSA suspends the recipient’s SSI benefits without time limit (as long as he or she remains otherwise eligible);
  • the recipient retains continued eligibility for medical assistance (Medicaid); and
  •  the individual’s eligibility does not terminate after 12 continuous months of suspension.

Note: Withdrawals for housing-related expenses must be spent in the month received or they will count as a resource of the Designated Beneficiary beginning on the first day of the month following receipt of the withdrawal.

Prior to opening an ABLE account, individuals should consult with their own advisors for additional information on the possible impact of having an ABLE account on the Designated Beneficiary’s eligibility for federal and state benefits.

Gifting

We have designed a special gifting tool that makes it easy for family and friends to make gifts into your account. From your online account, you can create an eGift event. You will add the email addresses of your friends and family members. We will send out an email to them with a unique link and a personalized message, instructing them on how to make a gift to your account.

Account Minimum

If an Account has a zero balance for 90 days or more it may be closed by the Program. To reinstate an Account closed by the Program for zero balance, the Designated Beneficiary must complete a reinstatement online. The $4 per month account maintenance fee continues to accrue until the Account is closed by the Program.

Withdrawals

Account owners can log in to the online portal to request a withdrawal to pay bills directly from the Account by electronic transfer or check, or to move funds from the Account to a personal checking or savings account and pay Qualified Disability Expenses from the personal account. Payment by ACH typically occurs within 3-5 business days of an online request. Payment by check typically occurs within 7-10 business days of an online request. You should carefully read the Fees and Expenses section of the Program Disclosure Statement for information on ACH and Check fees.

Withdrawal Fees

The Program charges $5 for each withdrawal by check and $1 for each ACH withdrawal in excess of two per month.

Qualified Withdrawals

A Qualified Withdrawal is a withdrawal that is used to pay Qualified Disability Expenses of the Designated Beneficiary of the Account. Like funds in and contributions to ABLE accounts, Qualified Withdrawals are not included in the Designated Beneficiary’s taxable income or counted as income in eligibility determinations for SSI or Medicaid. Note that SSA will apply normal SSI resource counting rules and exclusions to assets or other items purchased with funds from an ABLE account.

Non-Qualified Withdrawals

Non-Qualified Withdrawals are withdrawals used for any expense that is not a Qualified Disability Expense, or Rollover or Program-to-Program Transfer, and any withdrawals made while the Designated Beneficiary no longer meets the requirements of an Eligible Individual. Non-Qualified Withdrawals may negatively impact benefit eligibility and benefits for SSI, SSDI, and Medicaid. Non-Qualified Withdrawals will be subject to income tax on any earnings, and the Additional 10% Tax on any earnings, unless an exception applies.

Supplemental Security Income (“SSI”)-Countable Withdrawals

For a Designated Beneficiary whose financial eligibility is determined using SSI-based methodologies (as opposed to Modified Adjusted Gross Income (MAGI)-based methodologies), a withdrawal from an ABLE account may be countable as a resource only if (1) it is retained beyond the month in which the withdrawal is made and (2) it is used for a Non-Qualified Disability Expense in that or a subsequent month. ABLE account withdrawals used for expenses other than Qualified Disability Expenses will be counted in the month the expenditure is made.

For a Designated Beneficiary whose financial eligibility is determined using MAGI-based income methodologies, the income portion of the Non-Qualified Withdrawal subject to taxation will be included in the individual’s MAGI-based income.

Documentation for Withdrawals

The Designated Beneficiary is solely responsible for determining if a withdrawal is a Qualified Withdrawal or a Non-Qualified Withdrawal and for applicable federal and state benefit and tax consequences. It is also the responsibility of the Designated Beneficiary to maintain records necessary to respond to any questions from the IRS, SSA or other state or federal agencies related to withdrawals.

You should maintain good records on how you spend your Texas ABLE Program funds, including bank records, invoices and receipts. While we do not require documentation when you are requesting a withdrawal, you may be asked by state or federal agencies to verify your expenditures.

Temporary Holds on Withdrawals

The Program reserves the right not to allow withdrawals of funds from an Account for up to:

  • seven business days following receipt of contributions by check if that contribution is needed to fund the withdrawal;
  • five business days following receipt of contributions electronically if that contribution is needed to fund the withdrawal;
  • ten business days following a change of address of record for either the Authorized Legal Representative or the Designated Beneficiary; and
  • fifteen business days following a change in Authorized Legal Representative.

Rollovers and Program-to-Program Transfers

Withdrawals may also include Rollovers or Program-to-Program Transfers from the Texas ABLE Program to another qualified ABLE program or to an ABLE account for a Member of the Family who also is an Eligible Individual. You should contact the ABLE program that is receiving the transfer to determine appropriate procedures to follow and determine if they will charge any fees.

Medicaid Considerations

Under Section 529A of the IRC, following the death of the Designated Beneficiary, any state may be required to file a claim against the Designated Beneficiary’s estate or the Account itself for the amount of the total medical assistance paid for the Designated Beneficiary under the state’s Medicaid plan after the establishment of the Account (or any ABLE account from which amounts were rolled over or transferred to the Account). Such claims are sometimes referred to as “recapture.” The amount paid in satisfaction of such a claim is not a taxable withdrawal from the Account. Further, the amount is to be paid only after the payment of all outstanding payments due for the Qualified Disability Expenses of the Designated Beneficiary, including any funeral and burial expenses and is to be reduced by the amount of all premiums paid by or on behalf of the Designated Beneficiary to a Medicaid Buy-In program under the state’s Medicaid plan.

Procedures for filing claims may vary from state to state. The Designated Beneficiary, Authorized Legal Representative, and executors and administrators should consider seeking legal counsel on the applicability of, and any available exceptions to, Medicaid recapture under applicable state law and regulation.

Reporting of Withdrawals

Withdrawals will be reported annually to the IRS on Form 1099-QA. The Program is required to report monthly to the SSA on all Account balances and activity.

Account Fees

In addition to the Asset-Based Fees described in the Program Disclosure Statement, the Program currently charges the account fees listed below. Fees are subject to change.

FEE DESCRIPTION AMOUNT
Monthly Account Maintenance Fee Monthly charge to each Account (includes up to 2 ACH withdrawals per month). The fee is charged monthly including during periods when the account may be temporarily suspended for ID or ALR verification. The $4 fee is charged to all accounts, including those opened during the month that may not have been open for the entire month. $4
Electronic Delivery Fee

Fee for electronic delivery of program documents None
Annual Print/Mail Fee Fee for paper delivery of program documents. There is no fee if you elect e-delivery of program documents. $10
Returned Item Fee Charge for processing contributions that are returned unpaid $20
Enrollment Fee Fee for enrolling in the Program None
Check Processing Fee Charge for each check $5
ACH Processing Fee Charge for each withdrawal by ACH in excess of two (2) per month $1
Rollover Fee Charge to process rollovers to or out of Program None
Change of Designated Beneficiary Fee Fee to process a change of beneficiary to another Eligible Individual who is a Member of the Family of the former Designated Beneficiary None
Change of Authorized Legal Representative Fee Fee to process a change of Authorized Legal Representative None
Additional Fees Fee for additional services such as overnight delivery of documents, cost of outgoing wires, or re-issue of disbursement checks Amounts for additional services will vary depending on services provided

No fee will be charged for tax documents delivered via U.S. Mail. For Account owners who opt to receive all other Program documents electronically, no Print/Mail Fee will be charged. However, for Account owners requesting to receive all other Program documents by mail, the Program will charge a $10 annual Print/Mail Fee based on the calendar year. If you select this option, the Print/Mail Fee will be withdrawn from your Account immediately upon establishment of the Account. It will be assessed on a pro-rata basis based on the month the Account is established.

The Program Manager may debit your Account for costs incurred in connection with failed contributions (e.g., Returned Items such as returned checks, rejected ACH payments, and rejected electronic funds transfers) or for additional services you request (e.g., overnight delivery of documents, outgoing wires, and re-issue of disbursement checks).

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