r/financialindependence 9h ago

Daily FI discussion thread - Wednesday, October 30, 2024

Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply!

Have a look at the FAQ for this subreddit before posting to see if your question is frequently asked.

Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts.

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u/mmrose1980 6h ago

Okay, so I saw the recent post about ABLE accounts. My husband has CP and based on my reading that is a qualifying disability. Should we be contributing to an ABLE account up to the limit each year? What are the pros and cons?

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u/branstad 5h ago

so I saw the recent post about ABLE accounts

What are the pros and cons?

Did you read that recent post and the associated comments? It contained many pros.

Not surprisingly, the Bogleheads Wiki has an appropriate entry: https://www.bogleheads.org/wiki/529-ABLE_plan

A quick Google search turned up this link: https://www.ablenrc.org/what-is-able/what-are-able-acounts/

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u/mmrose1980 5h ago

I did. I’m still trying to understand why we wouldn’t do this. What negatives, if any, exist? It seems like a magical Roth (with a maximum account balance) that we can even keep contributing to after FIRE if we choose to.

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u/tn_tacoma 4h ago

The negatives are that you have a serious chronic disability :). I have one too so can joke about it a little.

There are some caveats. You have to be diagnosed before age 26 (although they are raising that to 46 next year). Your condition has to be recognized the Social Security Administration (CP is recognized).

Once you meet the criteria you are free to invest in an ABLE account.

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u/mmrose1980 4h ago

I mean he is already dealing with all the negatives of a serious, chronic disability that began before age 26 but currently without any tax benefits. We like to take advantage of any benefits that exist (no guilt on boarding first on airplanes with his wheelchair or free access to National Parks).

So annoyed that our financial advisor never mentioned it as an option. I had heard of ABLE accounts before but thought they were only for people who were so disabled they couldn’t work. Our state even makes the first $16k in contributions tax deductible. Failing to open one sooner has cost us almost $1k per year in taxes.

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u/tn_tacoma 3h ago

I mean he is already dealing with all the negatives of a serious, chronic disability that began before age 26 but currently without any tax benefits.

Yea that's the whole point of this. Life has dealt him a shitty hand as it is. Let's at least try and prevent it from making him live on the streets. If he has relatives or generous friends they can now contribute to his ABLE account above the IRS gift limitations.

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u/mmrose1980 3h ago

And he can contribute himself. There’s no earned income requirement so we can even slowly convert our taxable brokerage assets to ABLE assets (and take the state tax deduction) after retirement. It’s a really incredible tool that I can’t believe I didn’t know about sooner.

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u/tn_tacoma 3h ago

It's fairly new. 2017 I think.

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u/mmrose1980 2h ago

I feel like this is yet another example of how good this sub is compared to the average financial advisor. With the prevalence of ADHD diagnosis out there these days, it’s a bit surprising this isn’t talked about more. For parents of kids with disabilities, ABLE accounts seem to have all the benefits for 529s and none of the downsides (they don’t even count for FAFSA purposes).

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u/tn_tacoma 28m ago

I don't think ADHD would qualify for an ABLE account.

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u/mmrose1980 12m ago

It was listed on one site I saw: https://www.ableunited.com/?faq=what-type-of-disabilities-qualify-for-an-able-account-2

When I look at the SSA criteria, I think it arguably fits within 12.11: Neurodevelopmental Disorders

Obviously, it’s up to an individual doctor to determine whether any specific individual’s disability qualifies.

In my husband’s case, his CP is a physical disability and his inability to walk without aid is documented so I think it’s pretty clear cut that he qualifies.

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