Meghan Smallwood: 0:00

Welcome. This is the Postsecondary Transition podcast where we have conversations around the ins and outs and everything in between of the transition process for families of students with disabilities. I'm one of the hosts. My name is Meghan Smallwood, and I am a public school transition coordinator. And as always, I have my co-host with me.

Patrick Cadigan: 0:18

My name is Patrick Cadigan. I am also a public school transition coordinator. Here we go again; we are back. For our last episode, we had the first part of our discussion with Kelly Nelson and her helping us to understand more about ABLE accounts. And so now we're going to slide into part two of that discussion already in progress:...but then at the same time, it does sound like there is some flexibility. And what I mean by that is is like so for example, if you had a grandmother or grandfather who wanted to contribute money, then they can provide the money to, you know, the bank holder, and then that money can then go into this account as it was intended. You know, grandma and grandpa wanted to, wanted to send the money.

Kelly Nelson: 1:14

It could. But I'm going to give you one better solution than that, Patrick and you love this, because...

Patrick Cadigan: 1:19

I'm already loving it, I'm there.

Kelly Nelson: 1:21

Maryland ABLE has what they call a gifting page that comes with every ABLE account, and it's so easy to use you just from the online account dashboard, you click on the gifting page and you send a link to family and friends by email, by text, by messenger, folks that would normally perhaps be purchasing gifts around the holiday season, birthdays, graduations, whatever you can send them a gift a link to the gift page that recipient. When they get it, it'll say, you know, would you like to make a contribution to Patrick's ABLE account? If I click, yes, I put the amount of money in where I'm sending it from, when I hit send, it goes directly into the ABLE account. It never passes through any countable resources, which is wonderful. And then the best part is anyone that's making those contributions to able if they live in Maryland, they can use that gift contribution as an income subtraction on their Maryland state taxes. Oh, so grandma and grandpa want to, you know, put money away for the future, for their child, grandchild. They can do it and get an income subtraction on their taxes, mom and dad as well, anybody, any friends, they don't have to be relatives. You know, everybody can enjoy that if they live in Maryland and paid Maryland taxes.

Meghan Smallwood: 2:42

How many linked accounts can you have connected to the ABLE account?

Kelly Nelson: 2:46

You can have as many as you want, as long as those linked accounts are in the name of either the account holder or the alr. Okay, so I hope one day my job, my daughter gets a job. She's working towards that goal, and if that you know when that happens, she'll have probably have a checking account where her paycheck will get direct deposited to you. Will bet your buttons, I will be linking that to her ABLE account as well, so that we don't let that account get over resourced, and that she still can save it and access it whenever she needs it.

Meghan Smallwood: 3:18

That was another question that comes up. How do I access it? I mean, D, there's no bank to go to. There's no ATM. Where do I get my money?

Kelly Nelson: 3:25

There's no ATM. You're not going to drive down the road and see the Bank of Maryland able or any able program or anything. So it's all done, all managed online. So the way we take a transfer, oh, a withdrawal from our ABLE account is I log into my daughter's ABLE account with her username and password. Her dashboard pops up and there's a line that says, transfer. I click on it, and I select withdraw. It'll ask me how much money I want to withdraw and which bank, which of those linked bank accounts I want to send it to. Oh, and that's how I take the withdrawal. Then don't you have to take it out immediately so it doesn't impact the SSI. We wouldn't want to move the assets into a linked bank account in their own name, unless they were going to use it to spend it. Okay, got you. So what a person could do, like, let's just say, want to be able to give an, you know, a teenage or an adult age ABLE account owner, access to their able funds. One of the things that Maryland able has in place is called the prepaid card option. And I love the prepaid card option because it gives them access to their funds, but not all of the funds in their ABLE account, because when I load my daughter's prepaid card, it only has enough money on it to what I put in there. So if she had $5,000 in her ABLE account, she doesn't have access to all of that. She may have access to $200 and it's been a wonderful financial literacy. Tool for her mind, sharing that she has an intellectual disability, so this idea of money and finances and savings and budgeting that is, like, really, very abstract for her. It was tough, but we decided to get the prepaid card. It's an optional feature, and we decided to use it because we wanted her to be able to be empowered to make her own choices about spending money in her ABLE account, but we wanted to give her a budget, if you will. Now that word meant nothing to her at the time. She just knew that at the start of every month, she has a specific amount of money on her prepaid card where she can decide how to spend it, but there was a lot of life lessons along the way, because sometimes, and we all know this, none of us are born knowing how to budget or save, right? We just we learn it the hard way. So sometimes she'd have access to her card, and she'd be at a store and she'd see something really awesome, and she'd want to buy it, and she'd say, but this is my money. I can spend it, right if I want to, and I say you can, but remember, you've got that trip planned. You want to go to Hershey Park at the end of the month, and you're supposed to be going with a friend. Are we going to have enough money for Hershey Park? And that it kind of was this concrete, like practical way for her to go? Oh, okay, yeah. So she sometimes has to make hard choices about that, and sometimes she goes with the impulse, and sometimes she saves for the big goal, but it taught a lot, and I think it's it's been really helpful for her, and I think for a lot of transitioning age youth, to give them a chance to practice in a safe way. And it's very age appropriate, yes, and think about it. Meghan, like usually when we go out to a store or a restaurant, are we whipping out cash? The majority of the time we are all presenting a debit card, a credit card or something. So in school, we spend a lot of time teaching our kids about how to make change and make purchases. But realistically, they don't have a lot of practice doing that, because we usually don't have cash. So this is a way for her to do she can see from her phone how much money is on her debit card. I'm sorry, her prepaid card, she knows how much money she had, how much money she spent. So it was a good way to sort of teach that. And then I got a little tricky. I started adding things in, like her making the payment for her cell phone came out of her prepaid card, and that was a eye opening experience. She was like, Well, what happened? What happened to my money here? Like, what's going on? And I'm like, well, guess what? This is what it's like to be an adult. We have to pay for, like, your phone. Well, she didn't even realize you had to pay for a phone. And why would she right? Because our kids aren't thinking about that. So we're taking these baby steps into learning about making decisions about how our money is spent. Do want to mention, though, if people do want the prepaid card, it doesn't automatically come with the ABLE account. It's an option. You can order it at any time. You don't have to order it when you open the account. You can order it a couple months later or whenever. But it is an additional fee of$1.25 for the month, and that's whether you use the card 10 times or you don't use it at all. To me, I decided it was a good choice for our family, for the financial literacy piece, but also for convenience. I'm not going to lie. I am all about making my life as streamlined and simplified as possible. So when I would do things like pay for my daughter's Special Needs summer camp, instead of me charging it on my credit card and then taking money out of her ABLE account to pay me back for my credit card payment, now I just use her prepaid card to pay for her summer camp, and it just removes that extra step. So for$15 a year, it gave me convenient access, but it's you don't have to have it if you don't want.

Patrick Cadigan: 8:50

Well, then playing off of that, because it's funny, that was going to be, one of my questions is, is it, oh, does it have a debit card, but now you have this prepaid card, and there is, there is potentially a fee that is associated with it. In, for an ABLE account in general, is there, are there fees associated with that?

Kelly Nelson: 9:08

Yes, great question. So currently, our annual maintenance fee, and it has been for the last eight years, it's $35 for the year. It is prorated, so anyone that opened the account yesterday is probably going to pay just a couple dollars this year because they didn't have the account, you know, January through mid December. And it is assessed quarterly. So it's $8.75 four times a year. And it comes it's withdrawal directly from the account. And the reason that we have an account maintenance fee is because the Maryland able program is facilitated under the Maryland State Treasurer's Office. So we have, you know, three full time folks here that work as administrators for the program, myself included, but the treasurer's office is not a bank. We needed to partner with financial institutions. The Bank of New York Mellon is the one that's holding $134 million of assets that were being that are being saved right now by over 8,000 Maryland ABLE account holders. They're holding that money in trust. So that's where it is. And then we've partnered with Vestwell, which is the financial technology company that runs our website processes those banking transactions back and forth between the linked bank accounts, issues third party checks when requested, makes those purchases for investments. So they're doing that back end banking piece, so for $35 a year, that's what that covers, as well as our customer support team that's available Monday through Friday, 9 in the morning until 8:00 at night. And they operate our website, so they really get a lot for $35 a year. But that is the fee.

Meghan Smallwood: 10:50

I know you mentioned, too, earlier. Our specific web page. Is Maryland able? Because it's Maryland. Are there many states that have the ABLE account?

Kelly Nelson: 11:00

Currently, there's 47 ABLE programs nationwide, and Maryland is just one of them. So when people decide on which able program they want to be with, they do have a choice. If you live in Maryland and you're interested in opening an account in another state for whatever reason, if that state is open for national enrollment you can do. So there's a couple of states i It's, I know Florida for sure, and I think Louisiana, they're restricted to just in state residents, because Florida pays the administrative fees. There is no annual maintenance fee in Florida. So they're not going to let people from other states open Florida ABLE accounts, because their state treasury is paying for that. So that's how it works. And if people are interested in learning about, you know, other able programs around the country, I have some great resources. One is called ABLEToday. It's www.abletoday(all spelled out).org, pardon me, and that will show you all the ABLE programs that exist. There's a comparison tool to find out what their investment features are, their their account fees, all that kind of stuff is there, as well as some really good tools to just learn about ABLE legislation, ABLE accounts in general. They've got podcasts, they've got, you know, archived webinars, like lots of cool things for that, as well as the ABLE National Resource Center. It's another website that you can go to that also has similar, you know, resources and fact sheets and things like that. So it's a good place to to learn.

Meghan Smallwood: 12:42

So if I had an ABLE account in Maryland, but I ended up moving to another state with an ABLE account, will it just transfer over to that state?

Kelly Nelson: 12:50

That's a good question. You have options. You could either take your Maryland able to whatever state you move to, and continue to manage it, because, remember, it's linked to your existing bank account. You don't have to be in the state of Maryland to do it, so you can continue with your Maryland ABLE account. But we do recommend anytime someone moves, at least examine the state able program for the state that you're living in, because you may have tax benefits there that you're no longer going to have in Maryland. So the you know you don't pay Maryland taxes anymore, so your contributions cannot be used as an income subtraction. If you move to California, right? You'd want to look into California's able or calable and see maybe they offer a tax benefit and you can roll that money over with no penalties or fees.

Patrick Cadigan: 13:39

So one question that I had, as you use the term investment feature, do ABLE accounts earn interest?

Kelly Nelson: 13:48

They do we have here in Maryland, our program has a couple of different options. We have a, currently a cash savings option, which is an FDIC insured savings and I believe, Oh, my goodness, if I can remember my daughter's last statement, I believe she was receiving 3.6% interest at the time. It's all tax free earnings. We also have four investment options. These are portfolios that were created for Maryland, able and managed by Vanguard. And that current choices could be what we call a fixed income, which is 100% in bonds. So it's, you know, it's a low risk option, depending upon how bonds are doing. It may not be making a lot, earning a lot in interest, but it's, you know, people sometimes want that. We also have a conservative option where 80% of that portfolio is in bonds and just 20% is in the market. So it doesn't it's not very volatile, but it does have some potential growth from the stock market. We have a moderate which is a 5050, split between stocks and bonds and. Then we have our aggressive investment option, which is going to be 84% in the market and 16% in bonds. So it's really just depending upon, Hey, how are we going to use this money in our ABLE account? Are we going to use our ABLE account as a very transactionary account, meaning mom and dad are putting money in and then they're making monthly payments for orthodontist or whatever. So, you know, those folks tend to go towards that cash savings option because they're going to access those funds frequently. Some parents are like, No, we got everything covered right now. We're not using any funds from the ABLE account. We want to put the money in and use it as a long term investment. We're not planning on accessing this for 1015, 20 years, they tend to go with one of the, you know, other investment. But good news is you don't have to just pick one. You could do some of your money. You could put in the cash invest a cash savings. You could put other contributions into the one of the other portfolios. Technically, you could have all five of them if you chose to do that. I mean, you know, I don't know that makes a lot of sense to do that as a strategy, but you could, because every time they make a contribution to the ABLE account, the ALR gets to direct where those funds go. And do I want to put this $50 contribution into cash, or do I want to put this $50 contribution into one of these investment portfolios?

Patrick Cadigan: 16:21

We've heard you talk a lot about how to get started, how the system works. In your experience, do you think that there's an ideal time that a family would open an account?

Kelly Nelson: 16:34

Patrick, I love that you asked that question, because a lot of folks, especially that I've encountered over the last seven years that I've been with, Marilyn Abel, who have transitioning age youth or students or family members, they tend to wait until the very last minute because they're like, I don't really, you know, not getting any SSI right now. I really don't need that right now, but they're missing out on a wonderful opportunity. I know in my journey is a little bit differently, because my daughter was born with a brain injury, and there was extensive hospitalizations and medical expenses and medical equipment and diagnostics and continued hospitalizations over the years had ABLE accounts existed back then, it would have been a game changer for my family, because I know that. You know, when we were in the hospital for 101 days in intensive care, friends were calling and saying, What can I do? You know, other than bringing a meal over to feed my other children and my husband, who was taking care of him at home, I could have said, Yeah, you know, we are. We're facing$700 a month equipment rental. We're, you know, facing the specialty formula that was $400 a month. We didn't have any any benefits for that. We didn't have Medicaid or anything. People could have used that gifting page and helped out. So there's that for those, what's the we ones? You know, people that are starting out with a child that's diagnosed early, you can take advantage of using those funds to pay for all the additional costs that we have in raising a child with a disability. But I think that it also along the way, sets a sets an example about saving money and putting money aside, and we try to talk to my daughter about how we put money into her ABLE account, and we're saving some for the future. We're using some now, but mostly to get that low lying fruit done. Check the simple stuff off the list, because when you get to that transition age, and the closer you get to exiting the school system, it's just like things are flying at you left or right, and like, you know, it's things that you've been talking about in your IEP meetings for years. Oh my gosh. Now you got to take action on all this stuff. Get that account set up long before the transition time, because you don't want to get to the situation where your family member has money in their own name, more than $2,000 and it's possible guys over 18 years, mom and dad, grandparents, put money into a checking or savings account for them, it could be over $2,000 don't be denied SSI benefits because your child has an eligible disability, but they had too much money. So I say, you know, take care of that low lying fruit.

Meghan Smallwood: 19:23

Great point. Because I know, you know, we we start working with families when their child turns 14. And I know that 15, 16, 17, families will ask, "Well, what should I be doing? What should I be doing?" Because you can't do a lot until they reach that milestone of 18. This is one of those things that you're right. They can check off the list, and they don't have to worry about and I have encountered families who didn't realize it until it was almost too late that there was too much money in an account, because, you know, the grandparents passed away and left an inheritance, and they didn't think of anything of it. They just figured they'd be set for the future, not realizing the Jeopardy they're putting the SSI and the Medicaid in, so just to have it prepared and know that it's there to keep you on track, is a great, great option.

Kelly Nelson: 20:08

I'm glad you mentioned the inheritances, because if I had $1 for every time the phone rang that said, Oh my gosh. You know, great aunt Elizabeth passed away. I didn't even know it, but she left my daughter or my son, you know, like $8,000 life insurance policy. I They can't have this. We're going to lose all of our benefits, and I need to get this ABLE account open yesterday now, because now I don't know what I'm going to do with this money, but they said Abel could help me with it. And also, let me warn you, those back payments. So even, let's just say, your child doesn't have a lot of money in their own savings or checking, and you apply for SSI, and they get it, but it takes, sometimes nine months, sometimes longer, 18 months, two years longer, you will get a substantial back payment from the time that you applied. These back payments can be 2000 5000 8000 10,000 it depends on how long and how much of a back payment to no fault of your own. You're already over resourced. Yeah, so then they have this situation where, like, we got to spend it down within this nine month period. But what if they don't need it right then and there? Why are you just blowing through money just to get it out of their bank account, when you could put that back payment in the ABLE account and access it when they actually need it. Lot of people that have benefited from the ABLE account from the back payments.

Meghan Smallwood: 21:28

You are so right! Because I have brought that up many times when families have told me that they're waiting, waiting, waiting. I said, Well, get ready, because it's going to come and it's going to hit you hard, so you need to put that somewhere.

Kelly Nelson: 21:40

Yes, good advice.

Meghan Smallwood: 21:42

I learned from the best.

Patrick Cadigan: 21:45

Are there any other things, because, again, the whole conversation has been peppered with examples and scenarios. But are there any...what are other things that families can use this money for?

Kelly Nelson: 21:58

Well, it really can be literally anything if I if I even was going to give you the cheater notes of the two things that the IRS has said you cannot use ABLE account funds for, I'll tell you right up front, it's gambling and purchasing gifts for other people. The reason they say that is because ABLE accounts are intended for the use of the beneficiary, the person with the disability. So they want to keep that really cut and dry. So if a person with a disability wants to buy a gift for Mother's Day, Father's Day, holidays, birthdays, whatever, use another source of funds, because that's one of the things that they they do want to make sure that this is limited to the folks that are the beneficiaries. So there's so many ways that they can use it saving for a special trip. Or, you know, if someone's able to drive a car and they're saving up for that car, they can use it as a down payment on a car. They can put gas in the car with their able prepaid card. They can get oil changes with it, because, again, this is something that's promoting their independence in the community. I've had people purchase an automobile. I've had people do special trips. I've had people make modifications to a home that wasn't covered. Or sometimes folks that use those motorized wheelchairs as they're growing over the years, sometimes they grow a little faster than what Medicaid says that they can have a new chair for so your child has outgrown that motorized chair, and it's 1000s of dollars, but you have to wait until Medicaid says you have to wait another year or whatever. Use the prePA, use the card, use the ABLE account. Buy the prepaid card, and that would be a great thing to send out to family and friends saying, you know, our son is outgrown this chair, but Medicaid says we can't have one for another 18 months. And all right, can I tell Can I share with you? Out of the 8333 Maryland ABLE account holders, there are 738 of them that are consistently using their gifting page around the holidays and birthdays and special occasions. And over the last eight years, I've received over $5 million in gifts. Wow. You can't argue with the data. I mean, I love getting that data in because it's like, wow. Why not use the gifting page, especially if you have a really good reason that you're saving for a specific goal.

Meghan Smallwood: 24:23

And I know around this time, a lot of families are wondering, "what do I get them?" This is a great option.

Kelly Nelson: 24:30

Absolutely.

Patrick Cadigan: 24:32

All right, you didn't bring it up, and I thought you were going to, when we talk about goals, did your daughter go to Disney World.

Kelly Nelson: 24:42

She did. It took her about three years, and I was shocked that she set such a long term goal when I was talking about savings, because it's hard, guys, it's hard for us, like we want things and we're like, but then there's this really cool restaurant I want to I mean, come on, we got to admit it's. Hard to stick to a long term goal, but she did it. And can I tell you how proud of herself she was to be able to go to Disney, get her own tickets, go to wherever she wanted to eat? There it was. It was a really, you know, it was the magical in the sense that she was at Disney, but to see that she stuck to her guns and saved that so...

Meghan Smallwood: 25:24

That's awesome. So where's the next trip going to be? Has she decided?

Kelly Nelson: 25:28

Well, it's funny that you say that, because in middle school they had, she was still in an inclusive classroom, and back in middle school, and they had a trip that was going to go to Spain that summer for anybody in the sixth grade, and she wanted to go. And we went to the meeting, and they were talking about when the deposits were doing this, that and the other. And I talked to the person afterwards. I said, obviously, you know, Lily wants to go. She's probably going to need some help. I'd be happy to pay my own way to go with her, or whatever. And they're like, well, we can't do that. We can't let any, you know, non school staff person, and we don't have a person we can dedicate to her. So she was brokenhearted. She couldn't go. Ever since then, she said she's going to Spain, so now she's saving money to go to Spain. Well, good for her. That's gonna be a long term goal on if she has any idea how much that airfare is, but she's like, I didn't get to go, and other people did. My friends went and I never got a chance. I'm gonna go to Spain. And I'm like, All right, well, go ahead, start saving for it.

Meghan Smallwood: 26:26

There you go.

Patrick Cadigan: 26:26

Does she know where in Spain she wants to go?

Kelly Nelson: 26:29

No, she just knows Spain.

Meghan Smallwood: 26:31

To Spain.

Kelly Nelson: 26:32

...to Spain.

Patrick Cadigan: 26:33

Well, tell her, tell her, Barcelona is absolutely fantastic.

Kelly Nelson: 26:36

I would love to go there. I hope she picks there, because...

Meghan Smallwood: 26:36

Yeah.

Kelly Nelson: 26:36

...I would love to go with her, it's a definitely on my bucket list. So, yeah.

Meghan Smallwood: 26:44

Yeah.

Kelly Nelson: 26:44

...you know, just you being able to use it for special savings goals. And sometimes they're like, not that expensive, but it's something that's important to this child... Yeah....they want, it could be a new laptop or whatever. I mean, it doesn't have to be a huge trip to Spain, but...

Meghan Smallwood: 26:59

Right.

Kelly Nelson: 26:59

...pretty cool.

Patrick Cadigan: 27:00

I think we've gone through all of our questions.

Meghan Smallwood: 27:01

I think we ran out of questions.

Patrick Cadigan: 27:04

I appreciate all of this. I I genuinely had no idea. Like, that's one of the things that I love about this, is that now, like, I can I, as I'm listening to you talk, I'm already thinking of like, three or four of my students who I'm like, I'm gonna reach out to their families.

Kelly Nelson: 27:21

Well, that makes me happy, and I cannot tell you how much Maryland able appreciates our partnership with our school systems. The County has always been a wonderful partner to us, inviting us to all the resource fairs, giving us opportunities and other presentations, because I mentioned there's three full time staff that cover the entire state of Maryland. We cannot possibly be talking to everyone all the time, and our educators are at the table. They're at the IEP meetings, the annual meetings, and they have this wonderful opportunity to share that one page flyer that MSDE created in collaboration with Maryland ABLE last year that just, you know, provides an overview, and I get it. I've been the parent at the table. I mean, my daughter exited at 21 she started at 101 days old with the school system. So I've been in a lot of IEP meet, IFSP meetings and IEP meetings, and sometimes we can't hear things the first two, 510, times we see it. But eventually, as we get closer to that transition period, and we're seeing it again and again, and we're being told about it, I'm really seeing where families are coming up to me at these resource fairs and saying, oh my gosh, I learned about this at my IEP meeting. It was always there. You know...

Meghan Smallwood: 28:39

Yeah.

Kelly Nelson: 28:39

...we're talking about it before, but the light bulb is starting to go on. So thank you for the work that you're doing and helping us to connect with families.

Meghan Smallwood: 28:49

Absolutely and we always appreciate you coming to our fair and our workshops. I know we have one coming up in the spring, so we appreciate your your knowledge and your willingness to give us the information to share out.

Kelly Nelson: 29:01

Thank you. We love it.

Patrick Cadigan: 29:03

Well fantastic. Well, I'm going to say that that is going to be a great place for us, then to end this conversation, Kelly cannot, thank you enough. Fantastic.

Meghan Smallwood: 29:11

That was a great conversation. I love it.

Kelly Nelson: 29:13

Thanks, guys. It was a lot of fun, and I really appreciate it.

Patrick Cadigan: 29:25

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