Ascensus released data on the savings behaviors of people with ABLE accounts on its platform, in a first look at both utilization and growth.
ABLE accounts, so named for the federal Achieving a Better Life Experience (ABLE) Act passed in 2014, allow tax-deferred investment growth and tax-free withdrawals when savings are spent on qualifying disability-related expenses. (Earnings on nonqualified withdrawals, on the other hand, may be subject to federal income tax and a 10% federal penalty tax, as well as applicable state and local income taxes.)
The ABLE account allows people with a disability to save without risking the loss of federal disability benefits—and anyone, whether family or friends, can contribute to such accounts, which have an annual contribution maximum of $15,000.
The report by Ascensus, an independent recordkeeping services provider and a third-party administrator, finds that even though ABLE accounts just opened formally for enrollment in 2016, ABLE account owners have contributed enough to make average balances exceed $4,100 across all age ranges in only two years.
The use of ABLE accounts is growing, with Ascensus-administered accounts holding assets of more than $52,000,000 to date. As of year-end 2017, Ascensus had more than $16,000,000 in ABLE assets under administration, representing growth of 225% in assets administered in just under a year. On average, savers on the Ascensus platform set aside $641 with each contribution.
Auto savings features are helping with this growth rate, since in 2017, 21% of account owners made contributions through payroll direct deposits or recurring contributions through their bank.
In addition, account owners are taking the opportunity to “crowdsource” those account balances, with the Ascensus Ugift program receiving more than $500,000 in gifting contributions during 2017.