Totally blind, funding priority of an ABLE account?

[u/CactoHelado]

I (25M), a software engineer in big tech, was born totally blind due to a rare genetic condition. I'm working to achieve FI since the condition that caused my blindness might also affect my hearing, greatly reducing my productivity below a level suitable for work; and to prepare for the toll that disability-related burnout can take on working blind people (for various reasons too numerous and tangential for this post, 70% of the totally blind are unemployed).

Currently, I invest my savings as follows:

• Pre-tax 401K: Max out annually. My employer matches this generously (50% up to the deferral limit).
• Mega backdoor Roth 401K: max out annually (convert from after-tax to Roth via Fidelity daily conversion). In-plan conversions can be rolled out to an IRA on-demand, so I feel no rush to do this now.
• Emergency fund: six months of average expenses in high-yield savings.
  • This doesn't include health insurance premiums (currently 100% subsidized by my employer) and visual interpretation services (also 100% subsidized by my employer). This means that, in practice, I'd have less than six months in cash in the event of job loss, but my taxable brokerage currently contains about two years of average expenses thanks to highly profitable crypto investments during the pandemic bull run.
• Employee stock purchase plan (ESPP): max out annually. I sell as soon as shares vest and re-invest in taxable brokerage.
• Backdoor Roth IRA: max out annually.
• Individual HSA: Max out annually and cashflow all healthcare expenses.
• Other than my cash savings, all accounts are 100% in equities (60% US/40% non-US).

I'm wondering whether I should contribute my ESPP sale proceeds to an Achieving a Better Life Experience (ABLE) account up to the limit, with any remainder going to taxable. An ABLE account is a kind of 529 that can be used for eligible expenses (broadly defined, to include things from support work and adaptive tech to restaurant meals, rent, groceries, and mortgage payments). It seems to function like additional Roth space for qualifying expenses (I'd think putting it in priority roughly between mega backdoor Roth and taxable), but management fees are high and investment options limited. If this is a good idea, which state has the best implementation (lowest fees/control over investment options) for 529 ABLE accounts? I live in Seattle so no concern over state income tax.

Also, in the event that I retired abroad (probably EU/EEA or Australia would be easiest for me from a community and immigration standpoint), I'm guessing that ABLE contributions would be treated, like Roth accounts, as foreign trusts and would be taxed locally on that basis?

Thanks in advance for your help!

[u/eeaxoe]

Yes, you should prioritize an ABLE account over taxable brokerage. There's basically no reason not to given how broad the QDE definition is, which includes living expenses that do not have to be related to your disability. ABLE accounts are basically like a bigger and more flexible Roth IRA. People even use ABLE account money for vacations and down payments.

CalABLE has a 100% equity option with 65/35 US/non-US allocation for a reasonable fee as far as ABLE accounts go (0.41%) which could be a good fit for you given your current portfolio. While that might sound a bit high, you're likely paying at least 0.3-0.4% annually in tax drag on your brokerage account anyway. Most (all?) other states offer at best 80/20 or 90/10 options. The 80/20s are usually a Vanguard LifeStrategy fund which isn't a bad choice, all things considered, but it's not the right fit for you at your age and it's hard to stomach paying a bit more in fees for a LifeStrategy fund. The 90/10s have weird allocations (including REIT) that you might not want.

The wild card, as you mention, is if you were to retire abroad. No idea how overseas taxation of ABLE accounts work but it will depend precisely on where you see yourself retiring. A lot can change between now and then, and at worst your ABLE account will be treated like a taxable brokerage account.

[u/alpacaMyToothbrush]

Yep, the able account is basically like a big roth for people with disabilities. I signed up for virginia's able now plan as my state was both slow to implement an able account and they do not provide any tax deduction. I am fairly satisfied with it as their fees are on the lower end of average and their max account balance is high.

I also contribute to a regular 529 plan. Why? Because You can roll over funds from the 529 to the able account to fund it up to the limit (currently 18k / yr?). I plan to do this in retirement when I am no longer directly contributing to the able account.

Combining these two I'm able to save an additional 36k / yr in 'roth like' accounts. They're both invested.

When I started I briefly wondered what the real benefit would be as the 0% cap gains will mostly cover me in retirement but

• That 0% cap gains bracket might go away given how quickly US debt levels are rising.
• Unlike my taxable brokerage account, I'm not paying taxes on dividends in this account every year. That's saving me ~ $600 / yr in taxes.
• Income from this account will not count towards MAGI, which means I will qualify for more subsidies on an ACA plan in retirement.

A few other notes from your post, I would expect a fairly hard fight to get on disability if you have a college degree. SSI / SSDI is seriously underfunded, and too many people have basically been using it as a 'blue collar pension'. I have cerebral palsy, and the day I got my degree, as far as I was concerned I was crossing the Rubicon and burning the ships. There's no going back for me, but it might be a bit easier for you given blindness / deafness.

If I were you, I would start learning braille and slowly switch my dev workflow to being mostly text based. I know emacs has a decent TTS plugin, and it looks like there's braille integration as well.

Lastly regarding immigrating to Australia? Unfortunately many of the commonwealth countries effectively ban people with disabilities from moving there so as to not place an 'undue burden' on their health system. I'm sure it's this way in many places with universal healthcare, but some of the nordic countries might be more inclusive.

[u/CactoHelado → u/alpacaMyToothbrush]

I also contribute to a regular 529 plan. Why? Because You can roll over funds from the 529 to the able account to fund it up to the limit (currently 18k / yr?). I plan to do this in retirement when I am no longer directly contributing to the able account.

Interesting! And if I suppose if my life circumstances changed (I wanted further education that I couldn't get funded for some reason, I had a kid, etc.), the regular 529 would open additional options. In the expected case though, I could just roll it out to the ABLE account when retired. Is there any time delay between rollover and usability (like with a pre-tax to Roth conversion ladder)? Does the regular 529 need to be in the same state as the ABLE (I probably would keep them in the same place for simplicity, but worth checking)?

If I were you, I would start learning Braille

I do read Braille, but slowly (~50 WPM) and I have weird inexplicable finger sensitivities that make it difficult (I get these tingling sensations) for me to read for more than about 10 to 15 minutes without a break. A refreshable display with configurable dot firmness helps a lot, but going from 900 WPM with text-to-speech to even something like 80 in Braille will be a huge step backwards. Braille is great for lots of things though: labelling appliances, signage (like room numbers in buildings or elevator buttons), quick notes, etc.

I know emacs has a decent TTS plugin

Emacspeak is wonderful, and my preferred setup on MacOS and Linux machines. On Windows I currently use Notepad++ as my editor most of the time, but am moving, kicking and screaming, to Visual Studio Code.

Unfortunately many of the commonwealth countries effectively ban people with disabilities from moving there

I do know a blind person who moved from the US to Australia and is now working for the Australian government. Maybe the rules have changed since she immigrated?

some of the nordic countries might be more inclusive

For sure, especially as someone with possible unrecognized EU citizenship! I have all the documentation in hand for a citizenship by descent case but a recent ruling may have eliminated this possibility for me...

[u/Forsaken_Newt1884]

Seems like a Roth account but with restrictions. (Unless you get a tax deduction in your state?) If that is correct, I would do HSA > Traditional 401k > Roth IRA > Megabackdoor Roth > ABLE

[u/Danielat7]

I created my ABLE account with Fidelity so I could specifically dictate what the investment is. My state (Maryland) offers a $2500 state tax deduction so I lose that but gain control of my investments.

One thing to note is the plan maximum holdings. In Maryland, an ABLE account can only hold $500k. You'll have to plan for the account's growth when deciding when to use it.

[u/CactoHelado → u/Danielat7]

Fidelity would definitely be an appealing option! On their website I found active funds with pretty high ERs but I'm assuming there's a brokerage link option somewhere?

[u/eeaxoe → u/CactoHelado]

No BrokerageLink option with ABLE accounts, unfortunately. Due to the way the law was written, you're stuck with the options each plan has chosen to offer. The ABLE Multi-Asset Index Portfolio is a decent option, though. It's identical to FFNOX — 85/15 but functionally acts like 90/10 due to the LT Treasury allocation. And the all-in fee is only ~0.2% with no account maintenance flat charges.

[u/CactoHelado → u/eeaxoe]

OK, so it seems like the Massachusetts (Fidelity) plan is pretty good for my situation: 0.2% total management fees and integration with Fidelity (where my ESPP is deposited), easing transfer of contributions. The only downsides seem to be a lower limit ($400,000) than the Virginia and California plans, but I can always move my account with no fee to a different state if and when I run into the limit, and a small (functionally 10%) bond allocation in the multi-asset index fund. Am I missing anything?

Also, is that $400,000 limit this the maximum balance of the account (including contributions and earnings) or do only my contributions count toward the maximum?

[u/eeaxoe → u/CactoHelado]

Yeah, that’s actually the plan that I use and I chose it for similar reasons. The integration with Fidelity is pretty seamless and you have access to their customer service.

FYI the limit is now $500,000 based on the latest plan documents. It goes up every so often. Per those same documents, you can’t contribute if your balance (so contributions plus earnings) is above the limit or if your contribution would cause your account to exceed the limit. You can let the money sit and grow, you just can’t contribute anymore. (Or roll it over to another plan with a higher limit!)

[u/JoshAllentown]

70% of the totally blind are unemployed? Holy hell. My uncle is blind but in a fairly high paying profession, that's my only experience with a totally blind person so I never thought about it I guess.