Q&A: ABLE Act and the DD Endowment Trust



Print it: ETF and ABLE Side by Side

WHO IS IT FOR?

ETF: A person with a developmental disability, under age 65, who has been determined eligible for state DDA services.
The condition happened at or before age 18. Resident of Washington State at the time of enrollment.
ABLE: A person eligible for SSI benefits or the Social Security Disability, Retirement, and Survivor’s program; OR, submits certification that meets the criteria for a disability certification; lives in Washington State and whose disability occurred before age 26.


 

WHAT KIND OF ACCOUNT IS IT?

ETF: A special needs trust set up by a third party (Trust 1) and/or by the individual (Trust 2), and is a way to to save without losing eligibility for government benefits.
ABLE: A form of 529 Account Tax Favored Qualified ABLE program in IRS code.


 

HOW WERE THE TWO PROGRAMS CREATED?

ETF: Established in state law in 1999; 7 citizen governing board (6 appointment by Governor).
ABLE: Passed by Congress in 2014, requires federal rules and state legislative action to make accounts available.


 

IS IT AVAILABLE NOW?

ETF: Yes.
ABLE: Not yet. It’s pending federal rules and state legislative action.


 

ARE CONTRIBUTIONS LIMITED?

ETF: No limits.
ABLE: $14,000 a year, not to exceed State 529 limits.


 

ARE THERE LIMITS ON HOW THE MONEY CAN BE SPENT?

ETF: No, except for room and board (for persons receiving SSI).
ABLE: Qualified Disability-Related Expenses (yet to be defined).


 

DOES MONEY IN THE ACCOUNT IMPACT SSI AND MEDICAID ELIGIBILITY?

ETF: No.
ABLE: First $100,000 does not affect SSI eligibility.


 

HOW ARE ACCOUNT FUNDS INVESTED?

ETF: Funds are invested by the State Investment Board.
ABLE: Account holder directs investment. Up to two changes per year.


 

ARE THE FUNDS TAXED?

ETF: Investment earnings are taxed.
ABLE: No taxes; however, there is a 10% federal tax penalty for distributions not used for qualified disability expenses.


 

WHAT HAPPENS TO THE FUNDS WHEN THE PERSON DIES?

ETF: In a Trust I account (third-party), the money goes to whomever is identified in the trust documents; in a Trust II account (self-settled), the money is used to payback any costs for Medicaid services (if used).
ABLE: 100% of the funds are used to payback the costs for Medicaid services (if used).


 

CAN I ROLLOVER THE ACCOUNT?

ETF: Yes.
ABLE: Yes, however there is a penalty for rolling over to a non-ABLE account.


 

WHAT IF THE BENEFICIARY MOVES TO ANOTHER STATE?

ETF: The account remains in Washington State, even if the person moves to another state.
ABLE: A new account must be opened in the destination state.


 

WHAT ARE THE FEES TO OPEN AND MAINTAIN AN ACCOUNT?

ETF: $600 enrollment fee; a minimum $75 yearly management fee; a $75 tax prep fee. Fees are offset by a state match.
ABLE: To be determined.



2017

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