Part 2. How PA ABLE Works
A. Eligibility for Opening, and Maintaining Your Account
1. Eligibility
In order to own an Account, you must be an Eligible Individual under Section 529A. An individual is an Eligible Individual if he or she is entitled to benefits based on blindness or disability under Title II or XVI of the Social Security Act ("Social Security Disability Eligibility") or if the individual self-certifies, under penalty of perjury, to PA ABLE that he or she meets specified eligibility requirements ("Self-certification Eligibility"). In all cases, the blindness or disability must have occurred before the date on which the individual attained age 46.
You can find an Eligibility Quiz at PAABLE.gov to assist in deciding if an individual is eligible to open an Account. This Quiz is for informational purposes only and should not be considered to be an official determination of eligibility.
Please note that, except with respect to processing a Rollover, an Account Owner may not have more than one ABLE account at the same time. Please see Part 4.A.3. for more information.
a. Social Security Disability Eligibility Requirements
PA ABLE requires an individual who is claiming eligibility based on entitlement to Social Security Disability to certify in the enrollment process, subject to the penalties of 18 PA. C.S. Section 4904, relating to unsworn falsification to authorities, that he or she has received a benefit verification letter from the Social Security Administration and agrees to retain and provide the letter (or a genuine copy of the letter) to PA ABLE, the IRS, or the U.S. Treasury Department upon request. If the Account Owner fails to provide the benefit verification letter within 30 days of any request, PA ABLE reserves the right to suspend account activity until the requested information is provided or to involuntarily terminate the Account. (See Part 2.E.8.) For information about entitlement to benefits under Title II or XVI of the Social Security Act based on blindness or disability, please see https://www.ssa.gov/disability/professionals/bluebook/general-info.htm or contact your local Social Security Field Office.
The individual must also certify that the blindness or disability occurred before the individual attained age 46.
b. Self-certification Eligibility Requirements
PA ABLE requires an individual who is claiming eligibility based on self-certification to certify, in the enrollment process, subject to the penalties of 18 PA. C.S. Section 4904, relating to unsworn falsification to authorities:
- that he or she has a medically determinable physical or mental impairment which results in marked or severe functional limitations and which (i) can be expected to result in death or (ii) has lasted or can be expected to last for a continuous period of not less than 12 months. [Note: having a condition listed in the "List of Compassionate Allowances Conditions" maintained by the Social Security Administration (at https://www.ssa.gov/compassionateallowances/conditions.htm) satisfies this requirement.]
or
- is blind (within the meaning of the Social Security Act).
The individual must also certify that the disability or blindness occurred before the individual attained age 46. PA ABLE requires that you also certify under penalty of perjury that you have received a written diagnosis relating to the disability from a "licensed physician" (as defined in Section 1861(r) of the Social Security Act, 42 U.S.C. 1395x(r)). You must also agree to retain and provide a copy of the written diagnosis (including the name and physical address of the physician and the date of diagnosis) to PA ABLE upon request. If you fail to provide the requested information within 30 days of any request, PA ABLE reserves the right to suspend account activity until the requested information is provided or to involuntarily terminate the Account. (See Part 2.E.8.)
c. Changes in the Eligible Individual's Condition
PA ABLE requires you to notify PA ABLE if a change in your condition results in your no longer qualifying as an Eligible Individual. Failure to do so may result in an involuntary termination of your Account. (See Part 2.E.8.)
If a change in your condition results in your no longer qualifying as an Eligible Individual, your Account may continue accepting contributions until the end of the tax year in which the change occurs. However, any withdrawals you take at a time when you are not an Eligible Individual will be considered Non-qualified Withdrawals. In subsequent years, your Account can remain open but will be in suspension. During the period of suspension, your Account will remain an ABLE account, and all of the standard benefits protections described in Part 3 will apply to the funds in your Account. However, no additional contributions will be accepted and any withdrawals made will be Non-qualified Withdrawals. The suspension will be lifted if your condition changes so that you once again qualify as an Eligible Individual. It is your responsibility to notify PA ABLE if the Account Owner subsequently requalifies as an Eligible Individual.
2. Opening and Maintaining Your PA ABLE Account
a. The Enrollment Process
i. Who may open an Account
Eligible Individuals who are adults and have the legal capacity to enter into a contract, may open an Account or designate an Authorized Individual to open and maintain the Account on their behalf. In addition to being an Eligible Individual, to open an Account, you must (1) be a current resident of the U.S., (2) be 18 years of age or older, (3) have a Social Security Number or other taxpayer identification number, and (4) have a U.S. address that is not a Post Office Box.
ii. Authorized Individuals
An Account Owner who is 18 years of age or older and has legal capacity to enter into a contract may designate an Authorized Individual to open and maintain the Account.
However, if the Eligible Individual is a minor or an adult who lacks the capacity to enter into a contract, federal law limits who can serve as an Authorized Individual. In that case, the list of permitted Authorized Individuals, in order of priority, is the Account Owner's:
- agent under a power of attorney,
- conservator or legal guardian,
- spouse,
- parent,
- sibling,
- grandparent, or
- representative payee appointed for the Account Owner by the SSA.
The Authorized Individual must (1) be a current resident of the U.S., (2) be 18 years of age or older, (3) have a Social Security Number or other taxpayer identification number, and (4) have a U.S. address that is not a Post Office Box.
The Authorized Individual can exercise the same control over the Account as would an adult Account Owner with the capacity to enter into a contract. Any references in this PA ABLE Disclosure Statement to actions that must or may be taken by an Account Owner apply as well to an Account Owner's Authorized Individual - unless the content indicates otherwise. Under Pennsylvania's ABLE Act, an Authorized Individual who opens an account on behalf of a minor retains control of the Account even after the minor becomes an adult and maintains that control until he or she voluntarily relinquishes it or until another person with a higher priority provides to PA ABLE proof of their authority to take over as the Authorized Individual. An Account Owner who has reached the age of 21 and has the capacity to enter into a contract may request a termination of the account without the consent of the Authorized Individual (see Part 2.E.8.c.).
Authorized Individuals may neither have nor acquire any beneficial interest in the Account during the Account Owner's lifetime and must administer the Account for the benefit of the Account Owner.
It is the responsibility of the Authorized Individual to manage the Account in accordance with any legal documentation, such as guardianship documents or powers of attorney, that requires the Authorized Individual to act in concert with another individual. PA ABLE may act upon the instruction of any Authorized Individual. If legal documentation requires an Authorized Individual to act in concert with another individual, it is the duty of the Authorized Individual to reach agreement with the other individual before taking any action in managing and transacting on the Account. Whenever an action is required to be taken in connection with an Account, the Authorized Individual must take such action on behalf of the Account Owner.
None of the Plan Administrators will assume responsibility to ensure, or will incur any liability for failing to ensure, that any Authorized Individual (i) acts within the scope of his or her authority, or (ii) applies assets held on behalf of an Account Owner for proper purposes.
You may complete an Enrollment Form online at PAABLE.gov or by obtaining and mailing a paper form. A paper Enrollment Form can be obtained by downloading it from the website or by calling 855-529-ABLE (2253). While an initial contribution is not required, a contribution of at least $1 must be made within 90 days of opening your Account or the Account will be closed. If making an initial contribution, it will be credited to your Account when the Enrollment Form is received and all required information has been provided in good order.
By signing and submitting the Enrollment Form, you certify under penalty of perjury that the Account Owner meets all the requirements to be an Eligible Individual and that the Authorized Individual, if applicable, also meets the requirements to be an Authorized Individual. In addition, you agree that your Account is subject to the terms and conditions of the PA ABLE Contract, of which this PA ABLE Disclosure Statement, the PA ABLE Savings Program Participation Agreement (Appendix A), and the Enrollment Form are a part.
The information you must provide on the Enrollment Form includes, but is not limited to, the name, address, date of birth, Social Security Number, and the Internal Revenue disability classification code of the Account Owner as well as the name, address, date of birth, and Social Security Number of the Authorized Individual, if any. You must provide a U.S. address, which may not be a Post Office Box. You will also be required to list your selection of Investment Options. Your selections can be changed, subject to some limitations. (See Part 2.B.6.)
You can update your account information and investment selections online, by calling 855-529-ABLE (2253), or by submitting a paper form. To access your Account online, go to PAABLE.gov and click on "Login." There you can enter your online account username and password if you have previously registered for online access or register your Account by setting up a username and password. Once you have registered, you can obtain Account information at any time and make changes to your Account.
On a periodic basis, PA ABLE may utilize the National Change of Address (NCOA) database maintained by the U.S. Postal Service to verify the accuracy of Account addresses. PA ABLE may contact the Account Owner or Authorized Individual in order to verify the correct address and reserves the right to conform the Account record to the NCOA database information.
Whenever an address is changed, a confirmation of the change will be mailed to both the old and new addresses.
If a mailing to the mailing address of record is returned as undeliverable, PA ABLE will send a letter to that address in an attempt to confirm the mailing address. If the second mailing is returned as undeliverable, PA ABLE will place a "stop mail hold" on the Account. An Account on stop mail hold will receive no mailings from PA ABLE until the mailing address of record is corrected.
In the event that the mailing address of record becomes invalid, PA ABLE reserves the right to use reasonable methods to find the correct mailing address including, but not limited to, utilizing internet-based informational databases and contacting other individuals whose information has been provided to PA ABLE including the Account Owner, the Authorized Individual, or Authorized Users. If the current mailing address is found through any of these means, PA ABLE reserves the right to change the mailing address of record to the current mailing address.
c. Designating or Changing Individuals with Control of or Access to the Account
i. Change of Account Owner
The Account Owner may be changed only if the new Account Owner is an Eligible Individual and is a Sibling of the current Account Owner. The Sibling may change their Investment Options up to two times per year, regardless of whether the former Account Owner had already done so that same year. The Sibling may also contribute up to the full Annual Contribution Limit, regardless of the dollar amount of contributions made by the former Account Owner.
If the new Account Owner is not a Sibling of the current Account Owner, the change will be considered a Non-qualified Withdrawal (see Part 2.E.7.e.), any Account earnings may be subject to federal and state taxes and a federal penalty and the contribution into the new Account will be subject to the Standard Contribution Limit (currently $20,000). Additionally, the amount in the Account might be considered an asset of the former Account Owner and could impact that individual's means-tested benefits. The IRS defines a Sibling as a brother, sister, stepbrother, stepsister, half-brother, and half-sister, whether by blood or adoption.
ii. Successor Account Owner
The Account Owner may designate another individual who will become the owner of the Account in the event of the Account Owner's death. The Successor Account Owner must be an Eligible Individual at the time that they take ownership of the Account and a Sibling of the Account Owner. The Successor Account Owner will take ownership of the Account upon submission of documentation of the Account Owner's death and an Enrollment Form. The Account Owner can name, change, or remove the Successor Account Owner at any time by completing the Successor Designated Beneficiary form. A Successor Account Owner must be named before the original Account Owner's death. If the Account Owner does not name a Successor Account Owner, Account assets will be paid to the Account Owner's estate after any outstanding Qualified Withdrawals have been paid.
Please note that any funds remaining in the Account of the deceased Account Owner may be includable in the deceased Account Owner's gross estate for federal estate tax purposes. Payment of any federal estate taxes owed is the responsibility of the deceased Account Owner's estate.
iii. Authorized Individuals
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Control and relinquishing control. If an Authorized Individual has opened an account on behalf of an Account Owner, he or she may exercise the same control over the Account as the Account Owner. However, the Authorized Individual must act as a fiduciary for the Account Owner and may not have or acquire any beneficial interest in the Account during the lifetime of the Account Owner and must administer the Account for the benefit of the Account Owner.
An Account Owner who is 18 years of age or older, has legal capacity to enter into a contract and has appointed an Authorized Individual to manage the Account may remove or replace the Authorized Individual at any time.
An Authorized Individual may be removed or replaced by another person with a higher priority, and who provides required documentation.
An Authorized Individual who has opened an Account for a minor may relinquish control of the account to the Account Owner at any time after the Account Owner reaches the age of 18 and has the capacity to enter into a contract. Additionally, an Account Owner who has reached the age of 21 and has the capacity to enter into a contract may request a termination of the account without the consent of the Authorized Individual. Any person aggrieved by the decision to involuntarily terminate the Account may file an appeal.
An Authorized Individual who has opened an Account for someone who lacks capacity to enter into a contract may relinquish control of the Account to an individual listed in Part 2.A.2.a.(ii). The new Authorized Individual must be the highest ranking person on that list who is willing and able to assume management of the Account.
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Responsibility of Authorized Individual. The Authorized Individual is responsible for controlling the account for the benefit of the Account Owner. None of PA ABLE, the Department, Vestwell, the Investment Firms, or any federal or state entity or person will assume responsibility to ensure, or will incur any liability for failing to ensure, that any Authorized Individual (i) acts within the scope of his or her authority, or (ii) applies assets held on behalf of an Account Owner for proper purposes.
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Request to remove or change an Authorized Individual. An Account Owner who is 21 years of age or older with capacity to enter into a contract that has named an Authorized Individual may remove that Authorized Individual at any time. See Part 2.E.5.d. for more information.
Another person who ranks higher on the list in Part 2.A.2.a.(ii) than the current Authorized Individual of an Account Owner who is either under 21 years of age or lacks capacity to enter into a contract, and who is willing and able to act as Authorized Individual, may submit a written request to be named Authorized Individual. Copies of the request shall be provided to the current Authorized Individual.
Objections to any request for a new Authorized Individual shall be filed with PA ABLE no more than thirty (30) business days after the request. All objections to the request must include a detailed description of the nature of the objection. PA ABLE may request additional documentation regarding the matter, and will suspend withdrawal activity (and potentially other account access), while reviewing any such request and/or objection.
iv. Authorized User
Account Owners or Authorized Individuals can appoint one or more Authorized Users to an Account. Authorized Users can be assigned a variety of permission levels on an Account, from view-only access up to different levels of transactional access. Certain permission levels may require the Authorized User to have Power of Attorney. An Authorized User must be an adult with legal capacity to enter a contract and (if relevant to their assigned permission level) take actions on an Account. Authorized Users may only access an Account from within PA ABLE's online Account portal.
d. Account Restrictions
PA ABLEs reserves the right to:
- (1) freeze an Account and/or suspend Account services if (i) we receive notice of a dispute regarding Account assets, Account control or Account ownership, including notice of the death of an Account Owner (until appropriate documentation is received and we reasonably believe that it is lawful to transfer Account ownership), (ii) we reasonably believe a fraudulent transaction(s) may occur or has occurred, or (iii) we receive notice from an Account Owner who has reached the age of 21 that he or she wishes to assume control of his or her Account from an Authorized Individual.
- (2) close an Account, without the Account Owner's permission, (i) in cases of threatening or abusive conduct or suspicious, fraudulent or illegal activity, (ii) if it is determined that false or misleading information has been provided to PA ABLE in establishing or maintaining the Account, (iii) if it is determined that you are prohibited by law from participating in the program.
- (3) refuse to establish or terminate an Account if required documentation has not been provided in good order to PA ABLE or if we determine that it is in the best interest of PA ABLE or required by law; and
- (4) reject a contribution for any reason, including, but not limited to, PA ABLE's determination that a contribution to an Account is not in the best interests of PA ABLE, an Investment Option or the Account Owner. The risk of market loss, tax implications, penalties, and any other expenses as a result of the above will be solely the Account Owner's responsibility.
e. PA ABLE Communications
In addition to quarterly statements, PA ABLE Disclosure Statement Supplements, and transaction and profile confirmations, Account Owners may receive other PA ABLE communications including, but not limited to, notifications of special promotions, offers of additional services, and reminders of important contribution timeframes.
Quarterly statements, PA ABLE Disclosure Statement Supplements, and transaction and profile confirmations will be provided in paper format unless Electronic Delivery has been established. Electronic Delivery may be established during online enrollment or any time after the Account is opened by visiting PAABLE.gov. See Part 2.D. for more information.
All account communications will be sent either to the email of record or the mailing address of record for the Account.
B. Making Contributions
1. Who Can Contribute
Any person (including your friends and family), corporation, trust, or other legal entity may make a contribution to your Account. Contributions made by anyone other than the Account Owner (third party contributions) are completed gifts to the Account Owner and become the property of the Account Owner. Accordingly, such third party contributions may have federal gift and estate tax consequences.
2. Contribution Amounts and Limitations
An initial contribution is not required at the time the account is opened. However, a contribution of at least $1 must be made within 90 days of opening your Account or the Account will be closed. Additional contributions of $1 or more may be made at any time. You are not required to make a minimum number of contributions. How often you contribute is up to you.
Generally, contributions from all sources may not exceed the amount specified under Section 529A, currently $20,000 per year per Account (the "Standard Contribution Limit"). This amount may be adjusted for inflation from time to time.
There is an exception to this limitation for contributions made by Account Owners who are employed. Such Account Owners may be able to contribute more than the Standard Contribution Limit. Account Owners who have not made or received contributions to a 401(k) or other defined contribution plan, a 403(b) annuity contract, or a 457(b) deferred compensation plan, as defined by the Internal Revenue Code, during a tax year may contribute an amount above the Standard Contribution Limit. These additional work-related contributions are referred to as "ABLE to Work Contributions." An Account Owner's annual limit for additional ABLE to Work Contributions (the "ABLE to Work Contribution Limit") is the lesser of:
- (1) the amount of the Account Owner's compensation for the year, or
- (2) the federal poverty level for a one-person household in the Account Owner's state of residence, for the prior year. Federal poverty level information may be found at https://www.healthcare.gov/glossary/federal-poverty-level-fpl.
ABLE to Work Contributions may only be made by an Account Owner, either directly or through payroll deduction. However, these contributions do not have to be made directly from compensation income. Whether an employer matching contribution as described in Part 2.B.7.n can be treated as being made by the Account Owner depends on a number of factors. Please consult a financial, tax, or legal advisor for more information.
In order to take advantage of this exception for ABLE to Work Contributions, Account Owners must first certify that they are eligible for such contributions, either during account enrollment, or online in their Account portal after enrollment is complete.
The current Account Balance Limit for Contributions is $511,758. Accounts that have reached the Account Balance Limit for Contributions may continue to grow and accrue earnings.
Collectively, the Annual Contribution Limit (which includes the Standard Contribution Limit and the ABLE to Work Contribution Limit) and the Account Balance Limit for Contributions are referred to as the "Contribution Limits."
Contributions in excess of any Contribution Limit are known as "Excess Contributions." The Program Manager will not knowingly accept attempted contributions that would cause an Account to exceed either the Standard Contribution Limit or the maximum possible ABLE to Work Contribution Limit, currently equal to the federal poverty level for a one-person household in the Account Owner's state of residence, for the prior year. Federal poverty level information may be found at https://www.healthcare.gov/glossary/federal-poverty-level-fpl. An Account Owner's actual ABLE to Work Contribution Limit may, however, be less than these maximums if the Account Owner's earned income for the tax year is less than the applicable federal poverty level, or if he or she is not eligible to make ABLE to Work Contributions.
Account Owners and Authorized Individuals are solely responsible for calculating and ensuring compliance with Contribution Limits, and for maintaining adequate records for that purpose. Employed Account Owners seeking to make ABLE to Work Contributions must certify under penalties of perjury that (1) the Account Owner is eligible to make ABLE to Work Contributions, and (2) the Account Owner's contributions of compensation are not Excess Contributions. Any Excess Contributions could have an effect on the Account Owner's federal or state tax obligations. Account Owners may wish to consult a tax professional before making any such additional contributions.
If the Program Manager is made aware of an Excess Contribution that has been inadvertently contributed, it will make a good-faith effort to return the Excess Contribution to the contributor, plus or minus any investment gains or losses incurred as a result of market fluctuations between the date of the Excess Contribution and the date of refund. The Account Owner or Authorized Individual must request a return of any Excess Contributions before the day prescribed by law (including extensions of time) for filing tax returns for the taxable year in which the Excess Contribution was made.
Excess Contributions inadvertently applied to an Account and not returned to the contributor on or before the due date (including extensions) of the Account Owner's income tax return for the year in which the Excess Contributions were made will result in the imposition on the Account Owner of a 6% excise tax on the amount of Excess Contributions. None of the Commonwealth, PA ABLE, Vestwell, or the Investment Firms will be responsible for any loss, damage, or expense incurred in connection with a rejected or returned contribution.
3. Pennsylvania Tax Deductibility of Contributions
Contributions made to a PA ABLE account are deductible from the contributor's Pennsylvania taxable income, within limits. Currently, each taxpayer may deduct up to $19,000 each year. The deductible amount will increase with any changes in the amount excludable for federal gift tax purposes under the Tax Code. There is no limit on the number of Beneficiaries for which one taxpayer may contribute. However, the total deductions taken by one taxpayer cannot exceed $19,000 per year, nor can it reduce the contributor's taxable income to less than zero.
The deduction may be taken by the contributor regardless of who owns the Account. Deductions can be taken for contributions made by any method listed below (see Part 2.B.7.). The contribution must be made within the tax year or by check dated by December 31 of the tax year in which the deduction is taken. The deduction is claimed on the contributor's Pennsylvania income tax return (PA-40).
If you are not a Pennsylvania resident, you may want to investigate whether your state offers an ABLE plan with tax advantages and other benefits to its residents.
4. Contribution Date
PA ABLE will credit a contribution to your Account on the business day the funds are received if the funds are received prior to the close of the NYSE and the contribution is in good order. If funds are received in good order after the close of the NYSE, a contribution will be credited on the next succeeding business day on which the NYSE is open.
Year-End Contribution Deadlines
Check contributions must be received in good order by the last business day of the year at 4 PM EST, and online contributions by the second to the last business day of the year at 4 PM EST of each year. Recurring ACH contributions will be applied to the tax year in which the contribution is scheduled.
In the event of Force Majeure, PA ABLE may experience processing delays, which may affect your trade date. In those instances, your actual trade date may be after the trade date you would have received, which may negatively affect the value of your Account.
5. Directing Contributions to Investment Options
In the enrollment process you must specify how your contributions are to be distributed among the Investment Options you choose. For example, you could choose three investment options and allocate your contribution 60%, 35%, and 5%. Your designated distribution will apply to each subsequent gift contribution, direct deposit contribution, promo code contribution, and "Savings Booster" contribution until you direct otherwise. It is also used for any check contributions that are submitted in good order without a Contribution Form. For other contributions, you may direct a specific distribution each time you make a contribution to your Account.
6. Contributing through the Systematic Exchange Program
Except as otherwise described here, you may change the Investment Options in which previous contributions are already invested (an "Investment Exchange") twice per calendar year ("Investment Exchange Limit") or at the same time that you change the Account Owner. There are limitations, however, on Investment Exchanges from the Capital Preservation Option. Investment Exchanges are not permitted from the Capital Preservation Option directly to a competing Investment Option with similar characteristics. Assets must first be transferred into a non-competing Investment Option and held there for 90 days before they can be moved into a competing Investment Option, subject to the Investment Exchange Limit. As of the date of this PA ABLE Disclosure Statement, there are no such competing Investment Options in PA ABLE. This could change at any time.
Please note that a decision to change the allocation of future contributions will not affect the allocation of assets already in your Account, and vice versa.
7. Methods of Contributing
Contributions can be made to your Account through any of the methods listed below. They may not be made with cash, stocks, securities, or other nonbank account assets.
a. Checks and Money Orders
Personal checks (with the exception of starter's checks), cashier's checks, credit union checks, third-party checks, and teller's checks may be used. Checks should be payable to "PA ABLE" and accompanied by a Contribution Form, which is available online at PAABLE.gov. As an alternative to including a Contribution Form, you may include the name of the Account Owner and Account number on the check or provide separate written instructions. PA ABLE reserves the right to not accept checks PA ABLE deems unacceptable, including checks dated six months or older and foreign bank checks.
If your check is received at the physical location of our Processing Center (not just at its Post Office Box) in good order on a business day prior to the close of the NYSE, your contribution will be processed as of that day; if it is received after the close of the NYSE or on a non-business day, it will be processed on the next succeeding business day on which the NYSE is open.
If you make a contribution by check that is returned unpaid by the bank upon which it is drawn, you will be responsible for any losses or expenses incurred by the Investment Options or PA ABLE and PA ABLE may charge your Account a reasonable fee. PA ABLE reserves the right to reject or cancel any contribution due to nonpayment.
b. Wire Transfer
Wire transfers are initiated from the contributor's financial institution. Please call the Customer Service Center at 855-529-ABLE (2253) to obtain information regarding wire transfers.
c. Electronic Funds Transfer (EFT)
You may contribute to your Account by making a one-time Electronic Funds Transfer from your bank checking or savings account when you enroll online or any time after that by accessing your Account at PAABLE.gov or, if the bank account information has already been saved to your Account, you may call our Customer Service Center at 855-529-ABLE (2253). Before making an initial EFT, you must provide certain information about the bank account from which money will be withdrawn.
EFT contributions that are initiated in your online Account portal and in good order before 4:00 p.m., Eastern Time, on a business day will be credited to your PA ABLE Account effective the following business day. EFT contributions that are initiated in your online Account portal and in good order after 4:00 p.m., Eastern Time, or on a non-business day will be credited to your PA ABLE Account effective the second following business day.
Please note that if the Account Owner or Authorized Individual is not the owner or joint-owner of the bank account from which an EFT contribution has been made, PA ABLE reserves the right to provide to the bank account owner(s) information related to contributions from that bank account and/or to remove the bank account information from the Account records upon receiving a request accompanied by a signature guarantee from any owner of the bank account.
If an EFT contribution is returned unpaid by the bank upon which it is drawn, you will be responsible for any losses or expenses incurred by the Investment Options or PA ABLE, and PA ABLE may charge your Account a reasonable fee. We reserve the right to reject or cancel any contribution due to nonpayment. If the EFT contribution cannot be processed because the bank account on which it is drawn contains insufficient funds or because of incomplete or inaccurate information, PA ABLE reserves the right to suspend processing future EFT contributions.
d. Recurring Contributions
You may contribute to your Account through periodic automated debits from a bank checking or savings account, if the bank is a member of the Automated Clearing House (ACH), subject to any processing restrictions. You can initiate a Recurring Contribution during enrollment by completing the appropriate section of the online or paper enrollment form. Or, you may set up a Recurring Contribution after enrolling by accessing your Account at PAABLE.gov. Your Recurring Contribution can be made on a monthly, bi-monthly, or yearly basis.
Your Recurring Contribution authorization will remain in effect until PA ABLE has received notification from you of its termination and has had a reasonable amount of time to act on it. You may also elect to authorize an annual increase in the dollar amount of your Recurring Contribution. The increases will take effect each January 1st. You may terminate your Recurring Contribution at any time. For the termination to take effect, the request must be received at least five business days before the next scheduled Recurring Contribution. Recurring contribution changes are not effective until received and processed by PA ABLE.
Recurring Contribution debits from your bank account are initiated one business day before the day you indicate. You will receive a trade date of one business day prior to the day the bank debit occurs.
Recurring contributions with a debit date of January 1st, 2nd, 3rd, or 4th will be credited in the same year as the debit date, which might be the previous year.
Additionally, if the Account Owner or Authorized Individual is not the owner or joint-owner of the bank account from which a Recurring Contribution has been made, PA ABLE reserves the right to provide to the bank account owner(s), information related to contributions from that bank account and/or to remove the bank account information from the Account records and discontinue the Recurring Contribution upon receiving a request accompanied by a signature guarantee from any owner of the bank account.
If a Recurring Contribution is returned unpaid by the bank upon which it is drawn, you will be responsible for any losses or expenses incurred by the Investment Options or PA ABLE and PA ABLE may charge your Account a reasonable fee. We reserve the right to reject or cancel any contribution due to nonpayment. If the Recurring Contribution cannot be processed because the bank account on which it is drawn contains insufficient funds or because of incomplete or inaccurate information, PA ABLE reserves the right to suspend processing future Recurring Contributions. PA ABLE reserves the right to refuse to allow an Account Owner to establish a Recurring Contribution.
e. Payroll Deduction
Depending on your employer, you may be able to have contributions made automatically from your paycheck. To do so, your employer must agree and be able to meet PA ABLE operational and administrative requirements. Most employers agree to process automatic paycheck contributions in the same manner that direct deposit of paychecks to employees' bank accounts are made. If your employer permits this, you must initiate the process online from inside your Account portal, by navigating to the "Direct Deposit" menu option. Once you finish the steps in your Account portal, you will receive further instructions for your employer to complete set up of payroll deduction direct deposit.
Payroll deductions will be credited on the day the funds are received and in good order if received before the close of the NYSE. If received after the close of the NYSE or on a non-business day, payroll deductions will be credited on the next succeeding business day on which the NYSE is open.
Please note that even when contributions are made by payroll deduction, they are made from your after-tax earnings.
f. Direct Deposit from SSA
SSA benefits, such as SSI or SSDI payments, may also be automatically deposited into an Account. You must initiate this process online from inside your Account portal, by navigating to the "Direct Deposit" menu option and following the online instructions. Once you finish the steps in your Account portal, you will receive further instructions for completing setup of SSA direct deposit via the SSA's website.
g. Rollover from another qualified ABLE program
You can contribute to your Account by moving funds you have in another state's ABLE plan or funds in another Account Owner's ABLE Account as long as he or she is an Eligible Individual and your Sibling. Rollovers can be either Direct Rollovers or Indirect Rollovers.
In a Direct Rollover, funds are transferred directly from one ABLE account to another. In an Indirect Rollover, funds are withdrawn by an Account Owner and subsequently deposited into a new ABLE account. In the case of an Indirect Rollover, funds must be deposited within 60 days. If they are not, it is considered a Non-qualified Withdrawal. If the Rollover is from another state's program for the same Account Owner, the entire amount must be transferred, and the non-PA ABLE account must be closed within 60 days of the transfer. An Indirect Rollover for the same Account Owner may be done only once in a 12-month period without incurring tax consequences. If the Rollover is from a Sibling's ABLE account, less than the full amount may be transferred and there is no limit on the number of Rollovers.
To initiate a Rollover (Direct or Indirect) from another ABLE program into PA ABLE you must open a PA ABLE Account and complete the ABLE-to-ABLE Rollover Form. Additionally, PA ABLE must receive an accurate statement issued by the distributing qualified ABLE program that reflects both the principal and earnings attributable to the Rollover amount. Until this documentation is received, the entire amount of the Rollover contribution will be treated as earnings, which is subject to taxation if you take a Non-qualified Withdrawal.
Direct Rollover and Indirect Rollover contributions from another ABLE account that meet the criteria described in this Part are not subject to Contribution Limits. For example, you may make a Rollover contribution of $50,000 to an Account, even though you could not make such a contribution otherwise.
For both Direct Rollovers and Indirect Rollovers to and from the same Account Owner, you must provide PA ABLE with the amount of the current year contributions made to the original ABLE account as well as the number of Investment Option changes made in the original ABLE account during the current year. Note that although the amount of the Rollover is not subject to Contribution Limits as indicated above, Rollovers to and from the same Account Owner are required to carry over current year contributions and Investment Option changes to the new ABLE Account. For example, if during the current year an Account Owner contributed $8,000 and made one Investment Option change in the preexisting ABLE account, the $8,000 will apply toward the Account Owner's current year's Annual Contribution Limit in the new ABLE account and the one Investment Option change will apply towards the Account Owner's current year's twice per calendar year limit on changing Investment Options in the new ABLE Account.
Movement of funds that do not meet the conditions stated above for Rollovers may constitute a Non-qualified Withdrawal from the sending ABLE program account. That account owner's earnings may be subject to federal and state taxation and a federal penalty. In addition, one or both account owners might be subject to adverse government benefit consequences.
h. Rollovers from 529 Accounts to ABLE Accounts
You can contribute to your Account by moving funds you have or a member of your family (as defined by Section 529 of the Tax Code) has in a PA 529 or other state's 529 account. Funds transferred in this manner, in combination with any contributions made to your PA ABLE account in the then current calendar year, may not exceed the Standard Contribution Limit (See Part 2.B.2.)
To initiate a Rollover from a 529 account into PA ABLE you must already have or open a PA ABLE Account and complete the 529-to-ABLE Rollover Form. Additionally, PA ABLE must receive an accurate statement issued by the distributing qualified 529 program that reflects both the principal and earnings attributable to the Rollover amount. Until this documentation is received, the entire amount of the Rollover contribution will be treated as earnings, which is subject to taxation if you take a Non-qualified Withdrawal.
Movement of funds that do not meet the conditions stated above for Rollovers may constitute a Non-qualified Withdrawal from the sending 529 account. That account owner's earnings may be subject to federal and state taxation and a federal penalty. In addition, you might be subject to adverse government benefit consequences. Account Owners who are taxpayers in states other than Pennsylvania should note that those states may not consider such a Rollover from a 529 account to an ABLE account as qualified for state tax purposes. Please consult with the individual state to learn more.
i. Rollovers from 530A Trump Accounts to PA ABLE Accounts
Federal legislation passed in 2025 created "Trump Accounts," a new type of individual retirement account for minors, as provided for in Section 530A of the Internal Revenue Code. During the calendar year in which the Trump Account beneficiary turns 17, the entire balance of the Trump Account may be transferred, via a Direct Rollover, to a PA ABLE Account for the same beneficiary. Trump Account Rollovers do not count against the Annual Contribution Limit or the Account Balance Limit for Contributions. Rollovers from Trump Accounts to ABLE accounts are also not included in the Account Owner's gross income for tax purposes.
To initiate a Direct Rollover from the Account Owner's Trump Account into the Account Owner's PA ABLE Account, please contact the administrator for the Trump Account. The Rollover must be fully paid to PA ABLE by the last business day of the calendar year in which the Account Owner turns 17. Additionally, PA ABLE must receive an accurate statement issued by the Trump Account administrator that reflects both the principal and earnings attributable to the Rollover amount. Until this documentation is received, the entire amount of the Rollover contribution will be treated as earnings, which is subject to taxation if you take a Non-qualified Withdrawal.
j. Transfers between PA ABLE Accounts
You may transfer all or a portion of an Account Owner's Account balance to another PA ABLE Account. At the time of the transfer, the transferee must be the same Account Owner or an Eligible Individual and a Sibling of the transferor-Account Owner.
To initiate a transfer between PA ABLE Accounts, you must complete and submit the appropriate form or call the Customer Service Center at 855-529-ABLE (2253). If the Account Owners are not the same or the transferee-Account Owner is not a Sibling of the transferor-Account Owner, the transfer is considered a Non-qualified Withdrawal.
k. Online Gifting Page (Ugift®)
You may invite family and friends to contribute to your Account by setting up your personal gifting page online. You provide a link to your gifting page to selected family and friends and gift givers can either contribute online through an EFT or by mailing in a gift via check.
Gift contributions may be subject to a 10-day hold period (following settlement) before becoming available for withdrawal.
l. Gift of College Cards
Friends and family may contribute to your PA ABLE Account by using a Gift of College gift card. Digital gift cards may be purchased at paable.gov/gift in denominations ranging from $25 to $200. A distribution and processing charge ranging from $3.95, for a $25 gift card, to $5.95, for a $100-$200 gift card, is assessed at the time of purchase.
To redeem a gift card, Account Owners may simply visit paable.gov/redeem to get started.
m. Savings Boosters
Savings Boosters are a simple way to add money to your Account automatically. When you set up Savings Boosters, contributions will be made automatically, in an amount you choose, when the daily precipitation forecast is higher than 50% in your selected zip code, according to the National Weather Service (www.weather.gov).
n. Employer Matching Contributions
Employers may be eligible to claim a tax credit against their Pennsylvania state tax liability for making matching contributions to employees' ABLE accounts. The following conditions apply:
- An employer may claim the tax credit for matching contributions to its employees' ABLE accounts made after December 31, 2024.
- An employer may claim a tax credit equal to 25% of its aggregate matching contributions made in a tax year. An employer may claim the tax credit on up to $500 in aggregate matching contributions per employee per year.
- To receive the tax credit, an employer must provide the Pennsylvania Department of Revenue (Revenue) with proof of qualifying matching contributions at time of filing its Pennsylvania state tax return. Employers should consult with Revenue for more information.
- Employees are required to provide to their employers evidence of the total amount deposited into their ABLE accounts during the previous tax year. Employers may prescribe the manner in which employees provide this information.
- If the amount of an employer's approved tax credit exceeds its tax liability in a tax year, the tax credit may be carried forward for up to three years to reduce the employer's tax liability during those tax years.
- Employer matching contributions may be considered taxable on both the federal and state level. Employees should consult with a tax advisor.
- The ability to receive this tax credit is scheduled to expire on December 31, 2029.
Please note that PA ABLE will reject an employer matching contribution that is an Excess Contribution. If you notify PA ABLE that an Excess Contribution has been inadvertently contributed, the Excess Contribution and any associated earnings will be promptly refunded less any amounts attributable to market losses suffered between the date of the contribution and the date of the refund. For more information, please see Part 2.B.2.
Employers may wish to consider consulting with a financial, tax, legal, or employee benefits advisor for more guidance.
C. Choosing your Investment Options
1. Investment Options Summary
PA ABLE offers investment vehicles that are similar to mutual funds and other investment products. You can choose from among seven risk-based Investment Options and nine target-year Investment Options. Funds (assets) in all Investment Options are in different combinations (allocations) of stock funds, bond funds, stable value funds, and cash or cash equivalents.
In the risk-based Investment Options, the combinations range from aggressive investments (mostly stocks) to a Capital Preservation Option (stable value and cash or cash equivalents). The asset allocations (combination of stocks, bonds, stable value funds, and cash or cash equivalents) in the risk-based options are static; that is, they will not change over time without prior notice.
The target-year Investment Options are designed for withdrawals in or near the year referenced in the name of the applicable Investment Option. The funds (assets) are also in different combinations (allocations) of stock funds, bond funds, stable value funds, and cash or cash equivalents. The allocations automatically adjust to become more conservative as the target year approaches.
PA ABLE also offers an ABLE Visa® Prepaid Card managed by True Link Financial. Withdrawals can be taken from any Investment Option and loaded onto the ABLE Visa® Prepaid Card to use for Qualified Withdrawals.
Each of the Investment Options invests in products from Fidelity, Fifth Third Bank, Lincoln, Nationwide, Schwab, and Vanguard. The products include mutual funds, stable value funds, and cash or cash equivalents.
Although money contributed to PA ABLE will be invested in the Investment Options that hold these products, including mutual funds, neither PA ABLE, nor any of the PA ABLE Program's Investment Options are mutual funds. An investment in PA ABLE is an investment in municipal fund securities that are issued and offered by PA ABLE. You will own Units of the Investment Options, not shares in the Underlying Funds.
There is no limit on the number of the Investment Options you can choose.
2. Overview of Investment Options and Underlying Funds
a. Overview of Investment Option Choices
The Investment Options maintain a distribution (allocation) of funds (assets) among stocks, bonds, stable value funds, and cash or cash equivalents (See the charts below). The percentage of assets in each of these four types of investments determines how aggressive or conservative the Investment Option is considered to be. In general, the greater the percentage of assets allocated to stocks, the more aggressive the Investment Option is. On the other hand, the greater the percentage of assets allocated to bonds, stable value funds, and cash, the more conservative the Investment Option is. While, in general, aggressive options are considered to have higher risks, they also have the potential for greater investment earnings. Conservative options are considered to have lower risk, but also less potential for investment earnings. The seven risk-based Investment Options are named the Aggressive Option, the Moderately Aggressive Option, the Growth Option, the Moderate Option, the Moderately Conservative Option, the Conservative Option, and the Capital Preservation Option - in order of their declining degree of investment risk. As of the date of this PA ABLE Disclosure Statement, the nine target-year Investment Options are available in 5-year increments and are designed for withdrawals in or near the year referenced in the name of the applicable Investment Option: 2030, 2035, 2040, 2045, 2050, 2055, 2060, 2065, and 2070 or later. Choosing whether and which Investment Option to use is a personal decision for each Account Owner. You may wish to consult a financial advisor for guidance. PA ABLE cannot offer financial advice or direct you in any way regarding which Investment Option is best for you. For a full description of the Investment Options, see Part 2.C.3.
b. Overview of Underlying Funds and Share Classes
Each Investment Option invests its assets in one or more Underlying Fund(s). Currently these funds and the share class for each are:
- Fidelity 500 Index Fund (FXAIX)
- Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX)
- Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX)
- Fidelity International Index Fund (FSPSX)
- Fidelity Emerging Markets Index Fund (FPADX)
- Fidelity U.S. Bond Index Fund (FXNAX)
- Vanguard Total International Bond Index Fund Institutional Shares (VTIFX)
- Schwab TIPS Index Fund (SWRSX)
- Lincoln Stable Value Fund (Group Annuity Funding Agreement)
- Nationwide Stable Value Fund (Group Annuity Contract)
- Fifth Third Deposit Account
The Underlying Funds are primarily index funds, with two stable value funds, and one deposit account. An index fund is composed of a combination of different stocks or bonds chosen to match or track the components of a chosen index, such as the Standard & Poor's 500 Index. These funds adhere to specific rules or standards (e.g. efficient tax management or reducing tracking errors) that stay in place no matter the state of the financial markets. Each Underlying Fund that is an index fund reserves the right to substitute a different index for the index it currently tracks. This could happen if the current index is discontinued, if the index fund's agreement with the sponsor of its chosen index is terminated, or for any other reason determined in good faith by the Underlying Fund's board of trustees. In any such instance, the substitute index would measure the same market segment as the current index.
Additional information about the investment strategies and risks of each underlying mutual fund is available in its current prospectus and statement of additional information. You can obtain a copy of the current prospectus, the statement of additional information, or the most recent semiannual or annual report of any underlying mutual fund by visiting the appropriate Investment Manager's website or phone number:
A stable value fund seeks to preserve principal while providing steady, positive returns by investing in high-quality fixed income securities and utilizing investment contracts issued by banks or insurance companies.
The Fifth Third deposit account is a cash account that seeks to provide preservation of capital.
Please keep in mind that you will not own shares of the Underlying Funds. You are purchasing Units in PA ABLE, which invests your money in the Underlying Funds. PA ABLE reserves the right to change, at any time, the Investment Options, the asset allocations within the Investment Options, or the Underlying Funds in which the Investment Options are invested.
PA ABLE performs systematic calculations to allocate daily cash flows to the Underlying Funds, in an attempt to bring the Portfolios back to their target asset allocations. In addition, PA ABLE will perform quarterly rebalancing to bring the Investment Options back to their target allocations.
The following table represents the asset allocation targets and asset classes for each of the risk-based Investment Options as of the date of this PA ABLE Disclosure Statement:
Target Year Investment Options
| Underlying Investment |
2030 |
2035 |
2040 |
2045 |
2050 |
2055 |
2060 |
2065 |
2070+ |
| U.S. Equity |
|
6.5% |
24.0% |
34.0% |
37.5% |
44.0% |
47.5% |
51.0% |
58.5% |
62.0% |
| U.S. Large Cap |
Fidelity 500 Index Fund (FXAIX) |
5.0% |
22.0% |
31.0% |
33.5% |
39.0% |
41.5% |
44.0% |
50.0% |
52.5% |
| U.S. Mid Cap |
Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX) |
1.5% |
2.0% |
3.0% |
3.0% |
4.0% |
4.5% |
5.5% |
7.0% |
7.5% |
| U.S. Small Cap |
Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX) |
0.0% |
0.0% |
0.0% |
1.0% |
1.0% |
1.5% |
1.5% |
1.5% |
2.0% |
| International Equity |
|
3.5% |
11.0% |
16.0% |
17.5% |
21.0% |
22.5% |
24.0% |
26.5% |
28.0% |
| Developed International |
Fidelity International Index Fund (FSPSX) |
3.5% |
7.5% |
11.0% |
12.0% |
14.5% |
15.5% |
16.0% |
17.5% |
18.5% |
| Emerging Markets |
Fidelity Emerging Markets Index Fund (FPADX) |
0.0% |
3.5% |
5.0% |
5.5% |
6.5% |
7.0% |
8.0% |
9.0% |
9.5% |
| Fixed Income |
|
40.0% |
35.0% |
37.0% |
43.0% |
33.0% |
29.0% |
24.0% |
14.0% |
10.0% |
| Core Bond |
Fidelity U.S. Bond Index Fund (FXNAX) |
30.0% |
30.0% |
34.0% |
41.0% |
32.0% |
29.0% |
24.0% |
14.0% |
8.0% |
| International Bond |
Vanguard Total International Bond Index Fund Institutional Shares (VTIFX) |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
2.0% |
| Inflation-Protected |
Schwab TIPS Index Fund (SWRSX) |
10.0% |
5.0% |
3.0% |
2.0% |
1.0% |
0.0% |
0.0% |
0.0% |
0.0% |
| Stable Value |
|
40.0% |
24.0% |
10.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
|
Nationwide Group Annuity Contract |
20.0% |
12.0% |
5.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
|
Lincoln Group Annuity Funding Agreement |
20.0% |
12.0% |
5.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
0.0% |
| Cash and Cash Equivalents |
|
10.0% |
6.0% |
3.0% |
2.0% |
2.0% |
1.0% |
1.0% |
1.0% |
0.0% |
|
Fifth Third Deposit Account |
10.0% |
6.0% |
3.0% |
2.0% |
2.0% |
1.0% |
1.0% |
1.0% |
0.0% |
| Total Allocation |
|
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
3. Investment Option Descriptions
The following are descriptions of each of the Investment Options. A description of each of the Underlying Funds in which the Investment Options invest is in Part 2.C.4. below:
a. Target Year Investment Options
Investment Objective: The Target Year Investment Options seek to align the investment objective and level of risk with the anticipated time horizon of the Account Owner by considering the approximate year in which the Account Owner may expect to begin using funds to pay for Qualified Disability Expenses.
Investment Strategy: The Target Year Investment Options invest in different combinations of the Underlying Funds. The approximate percentages of each Investment Option's assets allocated to each Underlying Fund are shown in the "Target Year Investment Options" table in Part 2.C.2.b., above.
Each Target Year Investment Option is associated with a specific target year, in five-year increments which represent the approximate year when the Account Owner may begin to use assets more regularly.
Target Year Investment Options with the most distant target years are designed to seek favorable long-term returns by investing primarily in underlying investments that invest in equity securities. This strategy generally carries a higher level of risk but also offers greater potential for long-term growth compared to more conservative investments.
As the target of a specific Target Year Investment Option approaches, the portfolio gradually reduces its allocation to underlying investments that invest primarily in equity securities and increases its allocation to underlying investments that invest in more conservative asset classes such as fixed income securities, money market instruments, and other cash equivalents. This gradual and intentional shift in asset allocation over time is designed to help reduce volatility and preserve accumulated assets as the Account Owner moves closer to the anticipated period when assets may be needed for Qualified Disability Expenses.
This planned evolution of the asset allocation over time is commonly referred to as the portfolio's "glide path." As time progresses and the Account Owner approaches the designated target year of the Investment Option, the glide path becomes increasingly conservative, reducing overall portfolio risk while also potentially lowering expected returns.
Target Year Investment Options with earlier target years are designed to have a greater allocation to fixed income securities, stable value funds, and/or cash equivalents in order to emphasize capital preservation and reduced volatility as the anticipated use of funds approaches.
Investment Risks: The Target Year Investment Options have a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, Schwab funds, Lincoln stable value fund, Nationwide stable value fund, and Fifth Third Deposit Account, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
b. Aggressive Option
Investment Objective: The Investment Option seeks to provide long-term capital appreciation.
Investment Strategy: The Investment Option invests in two Vanguard stock index funds, three Fidelity stock index funds, one Vanguard bond index fund, one Fidelity bond index fund, and one Schwab inflation protected index fund. Through its investment in these Underlying Funds, the Investment Option allocates approximately 90% of its assets to stocks and 10% of its assets to fixed income. The approximate percentages of the Investment Option's assets allocated to each Underlying Fund are:
| Aggressive Option |
|
| Fidelity 500 Index Fund |
42.0% |
| Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares |
12.0% |
| Vanguard S&P Small-Cap 600 Index Fund Institutional Shares |
5.0% |
| Fidelity International Index Fund |
25.0% |
| Fidelity Emerging Markets Index Fund |
6.0% |
| Fidelity U.S. Bond Index Fund |
8.0% |
| Vanguard Total International Bond Index Fund Institutional Shares |
2.0% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, and Schwab Funds, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
c. Moderately Aggressive Option
Investment Objective: The Investment Option seeks to provide long-term capital appreciation with low income potential.
Investment Strategy: The Investment Option invests in three Fidelity stock index funds, two Vanguard stock index funds, one Fidelity bond index fund, one Vanguard bond index fund, and one Schwab inflation protected index fund. Through its investment in these Underlying Funds, the Investment Option allocates approximately 75% of its assets to stocks and 25% of its assets to fixed income. The approximate percentages of the Investment Option's assets allocated to each Underlying Fund are:
| Moderately Aggressive |
|
| Fidelity 500 Index Fund (FXAIX) |
36.0% |
| Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX) |
9.0% |
| Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX) |
4.0% |
| Fidelity International Index Fund (FSPSX) |
21.0% |
| Fidelity Emerging Markets Index Fund (FPADX) |
5.0% |
| Fidelity U.S. Bond Index Fund (FXNAX) |
18.0% |
| Vanguard Total International Bond Index Fund Institutional Shares (VTIFX) |
7.0% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, and Schwab funds, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
d. Growth Option
Investment Objective: The Investment Option seeks to primarily provide capital appreciation and secondarily provide current income.
Investment Strategy: The Investment Option invests in three Fidelity stock index funds, two Vanguard stock index funds, one Fidelity bond index fund, one Vanguard bond index fund, and one Schwab inflation protected index fund. Through its investment in these Underlying Funds, the Investment Option allocates approximately 60% of its assets to stocks and 40% of its assets to fixed income. The approximate percentages of the Investment Option's assets allocated to each Underlying Fund are:
| Growth |
|
| Fidelity 500 Index Fund (FXAIX) |
28.0% |
| Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX) |
8.0% |
| Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX) |
3.0% |
| Fidelity International Index Fund (FSPSX) |
17.0% |
| Fidelity Emerging Markets Index Fund (FPADX) |
4.0% |
| Fidelity U.S. Bond Index Fund (FXNAX) |
28.0% |
| Vanguard Total International Bond Index Fund Institutional Shares (VTIFX) |
12.0% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, and Schwab funds, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
e. Moderate Option
Investment Objective: The Investment Option seeks to primarily provide moderate current income and secondarily provide capital appreciation.
Investment Strategy: The Investment Option invests in three Fidelity stock index funds, two Vanguard stock index funds, one Fidelity bond index fund, one Vanguard bond index fund, one Schwab inflation protected index fund, one Lincoln stable value fund, one Nationwide stable value fund, and one deposit account held at Fifth Third. Through its investment in these Underlying Funds, the Investment Option allocates approximately 45% of its assets to stocks, 45% of its assets to fixed income, 7% to stable value, and 3% to cash or cash equivalents. The approximate percentages of the Investment Option's assets allocated to each Underlying Fund are:
| Moderate |
|
| Fidelity 500 Index Fund (FXAIX) |
22.0% |
| Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX) |
6.0% |
| Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX) |
2.0% |
| Fidelity International Index Fund (FSPSX) |
12.0% |
| Fidelity Emerging Markets Index Fund (FPADX) |
3.0% |
| Fidelity U.S. Bond Index Fund (FXNAX) |
37.0% |
| Vanguard Total International Bond Index Fund Institutional Shares (VTIFX) |
8.0% |
| Lincoln Stable Value Fund |
3.5% |
| Nationwide Stable Value Fund |
3.5% |
| Fifth Third Deposit Account |
3.0% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, Schwab funds, Lincoln stable value fund, Nationwide stable value fund, and the Fifth Third Deposit Account, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
f. Moderately Conservative Option
Investment Objective: The Investment Option seeks to primarily provide current income with moderate capital appreciation and low capital preservation.
Investment Strategy: The Investment Option invests in three Fidelity stock index funds, two Vanguard stock index funds, one Fidelity bond index fund, one Vanguard bond index fund, one Schwab inflation protected index fund, one Lincoln Financial stable value fund, one Nationwide stable value fund, and one deposit account held at Fifth Third. Through its investment in these Underlying Funds, the Investment Option allocates approximately 30% of its assets to stocks, 42% of its assets to investment-grade bonds, 20% to stable value, and 8% to cash or cash equivalents. The approximate percentages of the Investment Option's assets allocated to each Underlying Fund are:
| Moderately Conservative |
|
| Fidelity 500 Index Fund (FXAIX) |
14.5% |
| Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX) |
4.0% |
| Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX) |
1.5% |
| Fidelity International Index Fund (FSPSX) |
8.0% |
| Fidelity Emerging Markets Index Fund (FPADX) |
2.0% |
| Fidelity U.S. Bond Index Fund (FXNAX) |
31.0% |
| Vanguard Total International Bond Index Fund Institutional Shares (VTIFX) |
7.0% |
| Schwab TIPS Index Fund (SWRSX) |
4.0% |
| Lincoln Stable Value Fund |
10.0% |
| Nationwide Stable Value Fund |
10.0% |
| Fifth Third Deposit Account |
8.0% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, Schwab funds, Lincoln stable value fund, Nationwide stable value fund, and Fifth Third Deposit Account, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
g. Conservative Option
Investment Objective: The Investment Option seeks to primarily provide capital preservation, moderate current income and very low capital appreciation.
Investment Strategy: The Investment Option invests in three Fidelity stock index funds, two Vanguard stock index funds, one Fidelity bond index fund, one Vanguard bond index fund, one Schwab inflation protected index fund, one Lincoln Financial stable value fund, one Nationwide stable value fund, and one deposit account held at Fifth Third. Through its investment in these Underlying Funds, the Investment Option allocates approximately 10% of its assets to stocks, 25% of its assets to fixed income, 50% of its assets to stable value, and 15% to cash or cash equivalents. The approximate percentages of the Investment Option's assets allocated to each Underlying Fund are:
| Conservative |
|
| Fidelity 500 Index Fund (FXAIX) |
5.0% |
| Vanguard S&P Mid-Cap 400 Index Fund Institutional Shares (VSPMX) |
1.0% |
| Vanguard S&P Small-Cap 600 Index Fund Institutional Shares (VSMSX) |
0.5% |
| Fidelity International Index Fund (FSPSX) |
3.0% |
| Fidelity Emerging Markets Index Fund (FPADX) |
0.5% |
| Fidelity U.S. Bond Index Fund (FXNAX) |
18.0% |
| Vanguard Total International Bond Index Fund Institutional Shares (VTIFX) |
2.0% |
| Schwab TIPS Index Fund (SWRSX) |
5.0% |
| Lincoln Stable Value Fund |
25.0% |
| Nationwide Stable Value Fund |
25.0% |
| Fifth Third Deposit Account |
15.0% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Vanguard funds, Fidelity funds, Schwab funds, Lincoln stable value fund, Nationwide stable value fund, and Fifth Third Deposit Account, see Part 2.C.4. and Explanation of Investment Risk Factors in Appendix B.
h. Capital Preservation Option
Investment Objective: The Investment Option has a primary goal of capital preservation with a secondary goal of stable returns.
Investment Strategy: The Investment Option invests in one Lincoln stable value fund, one Nationwide stable value fund, and one deposit account held at Fifth Third. Through its investment in these Underlying Funds, the Investment Option allocates approximately 65% of its assets to stable value, and 35% to cash or cash equivalents.
Investments in the Capital Preservation Option will earn a blended rate of interest based on the rates of the underlying investment products in the Capital Preservation Option. Each stable value fund will credit interest at an annual guaranteed interest rate that is reset periodically. The guaranteed minimum interest rate on the stable value funds shall never be less than 1%. The interest rate for the deposit account held at Fifth Third Bank will vary over time and can change daily without notice.
| Capital Preservation |
|
| Lincoln Stable Value Fund |
32.5% |
| Nationwide Stable Value Fund |
32.5% |
| Fifth Third Deposit Account |
35% |
Investment Risks: The Investment Option has a number of investment related risks. For a list and descriptions of the principal risks associated with the Lincoln stable value fund, Nationwide stable value fund, and Fifth Third Deposit Account, see Part 2.C.4.
The Investment Option is primarily subject to credit risk, interest rate risk, and inflation risk. The stable value funds are general account obligations of the insurers, so all guarantees of principal and interest depend on each insurer's financial strength; they are not FDIC insured or guaranteed by any government agency and could lose value if an insurer fails to perform. The interest credited on the stable value funds is reset periodically and, while subject to a minimum rate, can be reduced over time and may lag returns available on higher-growth assets.
The Fifth Third Bank deposit account is an obligation of the bank. The deposit account's rate can change daily, has no guaranteed floor, and may underperform other bank deposits or fixed-income options.
Because the portfolio is designed for capital preservation and low volatility, it carries the risk that over time, returns may not keep pace with inflation and may be lower than those from portfolios with greater exposure to equities or other growth-oriented assets.
Transfers are not permitted from the Capital Preservation Option directly to a competing Investment Option with similar characteristics. Assets must first be transferred into a non-competing Investment Option and held there for 90 days before they can be moved into a competing Investment Option, subject to the Investment Exchange Limit. As of the date of this PA ABLE Disclosure Statement, there are no such competing Investment Options in PA ABLE.
4. Underlying Funds Descriptions
The following are descriptions of each of the Underlying Funds:
a. Fidelity® 500 Index Fund (FXAIX)
Objective: Fidelity® 500 Index Fund seeks to provide investment results that correspond to the total return (i.e., the combination of capital changes and income) performance of common stocks publicly traded in the United States.
Strategy: The Fund normally invests at least 80% of assets in common stocks included in the S&P 500® Index. The S&P 500® Index is a widely recognized, unmanaged index of common stock prices. The S&P 500® Index broadly represents the performance of common stocks publicly traded in the United States. Effective December 11, 2025, derivative instruments that provide investment exposure to the investments above or exposure to one or more market risk factors associated with such investments are included in the fund's 80% policy, consistent with the fund's investment policies and limitations with respect to investments in derivatives. The Fund may lend securities to earn income for the fund.
Principal Risks: The Fund is subject to Stock Market Volatility, Issuer-Specific Changes, Correlation to Index, Passive Management Risk, and Securities Lending Risk. These risks are discussed under Fidelity Investment Risks in Appendix B.
b. Vanguard S&P Mid-Cap 400 Index Fund (VSPMX)
Objective: The Fund seeks to track the performance of a benchmark index that measures the investment return of mid-capitalization stocks in the United States.
Strategy: The Fund employs an indexing investment approach designed to track the performance of the S&P MidCap 400® Index (the "Target Index"). The Target Index measures the performance of mid-size companies in the United States. Under normal circumstances, the Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the stocks that make up the Target Index. The Fund attempts to replicate the Target Index by investing all, or substantially all, of its assets in the stocks that make up the Target Index, holding each stock in approximately the same proportion as its weighting in the Target Index.
Principal Risks: The Fund is subject to General Market Risk, Investing in Equity Markets, Market Capitalization (Market Cap), Index Investing, and Concentration Risk. These risks are discussed under Vanguard Investment Risks in Appendix B.
c. Vanguard S&P Small-Cap 600 Index Fund (VSMSX)
Objective: The Fund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks in the United States.
Strategy: The Fund employs an indexing investment approach designed to track the performance of the S&P SmallCap 600® Index (the "Target Index"). The Target Index measures the performance of small-capitalization companies in the United States. Under normal circumstances, the Fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in the stocks that make up the Target Index. The Fund attempts to replicate the Target Index by investing all, or substantially all, of its assets in the stocks that make up the Target Index, holding each stock in approximately the same proportion as its weighting in the Target Index.
Principal Risks: The Fund is subject to General Market Risk, Investing in Equity Markets, Market Capitalization (Market Cap), Index Investing, and Concentration Risk. These risks are discussed under Vanguard Investment Risks in Appendix B.
d. Fidelity® International Index Fund (FSPSX)
Objective: The Fund seeks to provide investment results that correspond to the total return of foreign stock markets.
Strategy: The Fund normally invests at least 80% of assets in common stocks included in the MSCI EAFE Index, which represents the performance of foreign stock markets. The MSCI EAFE Index is a capitalization-weighted index that currently includes stocks of companies located in 16 European countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom), Australia, New Zealand, Hong Kong, Japan, and Singapore. The MSCI EAFE Index broadly represents the performance of foreign stock markets. Effective December 11, 2025, derivative instruments that provide investment exposure to the investments above or exposure to one or more market risk factors associated with such investments are included in the fund's 80% policy, consistent with the fund's investment policies and limitations with respect to investments in derivatives. The Fund uses statistical sampling techniques based on such factors as capitalization, industry exposures, dividend yield, price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, earnings growth, and country weightings to attempt to replicate the returns of the MSCI EAFE Index. The Fund may lend securities to earn income for the fund.
Principal Risks: The Fund is subject to Stock Market Volatility, Foreign Exposure, Geographic Exposure to Europe, Geographic Exposure to Japan, Issuer-Specific Changes, Correlation to Index, Passive Management Risk, and Securities Lending Risk. These risks are discussed under Fidelity Investment Risks in Appendix B.
e. Fidelity® Emerging Markets Index Fund (FPADX)
Objective: The Fund seeks to provide investment results that correspond to the total return of emerging stock markets.
Strategy: The Fund normally invests at least 80% of assets in securities included in the MSCI Emerging Markets Index and in depositary receipts representing securities included in the index. The MSCI Emerging Markets Index is a market capitalization-weighted index designed to measure the performance of large and medium-capitalization companies domiciled in emerging markets countries across the world. Derivative instruments that provide investment exposure to the investments above or exposure to one or more market risk factors associated with such investments are included in the fund's 80% policy, consistent with the fund's investment policies and limitations with respect to investments in derivatives. The Fund uses statistical sampling techniques based on such factors as capitalization, industry exposures, dividend yield, price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, earnings growth, country weightings, and the effect of foreign taxes to attempt to replicate the returns of the MSCI Emerging Markets Index. The Fund may lend securities to earn income for the fund.
Principal Risks: The Fund is subject to Stock Market Volatility, Foreign and Emerging Markets Risk, Geographic Exposure to Asia, Geographic Exposure to China and the China Region, Issuer-Specific Changes, Correlation to Index, Passive Management Risk, and Securities Lending Risk. These risks are discussed under Fidelity Investment Risks in Appendix B.
f. Fidelity® U.S. Bond Index Fund (FXNAX)
Objective: The Fund seeks to provide investment results that correspond to the aggregate price and interest performance of the debt securities in the Bloomberg U.S. Aggregate Bond Index.
Strategy: The Fund normally invests at least 80% of assets in bonds included in the Bloomberg U.S. Aggregate Bond Index. The Bloomberg U.S. Aggregate Bond Index is a broad based, flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, mortgage-backed securities (agency fixed-rate pass-throughs), asset-backed securities and collateralized mortgage-backed securities (agency and non-agency). Effective December 11, 2025, derivative instruments that provide investment exposure to the investments above or exposure to one or more market risk factors associated with such investments are included in the fund's 80% policy, consistent with the fund's investment policies and limitations with respect to investments in derivatives. The Fund uses statistical sampling techniques based on duration, maturity, interest rate sensitivity, security structure, and credit quality to attempt to replicate the returns of the Bloomberg U.S. Aggregate Bond Index using a smaller number of securities. The Fund engages in transactions that have a leveraging effect on the fund, including investments in derivatives - such as swaps (interest rate, total return, and credit default), options, and futures contracts - and forward-settling securities, to adjust the fund's risk exposure. The Fund invests in Fidelity's Central funds (specialized investment vehicles used by Fidelity® funds to invest in particular security types or investment disciplines) consistent with the asset classes discussed above.
Principal Risks: The Fund is subject to Interest Rate Changes, Foreign Exposure, Prepayment, Issuer-Specific Changes, Correlation to Index, Passive Management Risk, and Leverage Risk. These risks are discussed under Fidelity Investment Risks in Appendix B.
g. Vanguard Total International Bond Index Fund (VTIFX)
Objective: The Fund seeks to track the performance of a benchmark index that measures the investment return of non-U.S. dollar-denominated investment-grade bonds.
Strategy: The Fund employs an indexing investment approach designed to track the performance of the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged) (the Index). This Index provides a broad-based measure of the global, investment-grade, fixed-rate debt markets. The Index includes government, government agency, corporate, and securitized non-U.S. investment-grade fixed income investments, all issued in currencies other than the U.S. dollar and with maturities of more than one year. The Index is market value-weighted and capped to comply with investment company diversification standards of the Internal Revenue Code, which state that, at the close of each fiscal quarter, a fund's (1) exposure to any particular bond issuer may not exceed 25% of the fund's assets and (2) aggregate exposure to issuers that individually constitute 5% or more of the fund may not exceed 50% of the fund's assets. To help enforce these limits, if the Index, on the last business day of any month, were to have greater than 20% exposure to any particular bond issuer, or greater than 48% aggregate exposure to issuers that individually constitute 5% or more of the Index, then the index provider would reallocate the excess to bonds of other issuers represented in the Index. The Fund will attempt to hedge its foreign currency exposure, primarily through the use of foreign currency exchange forward contracts, in order to correlate to the returns of the Index, which is U.S. dollar hedged. Such hedging is intended to minimize the currency risk associated with investment in bonds denominated in currencies other than the U.S. dollar. The Fund may become nondiversified, as defined under the Investment Company Act of 1940, solely as a result of an index rebalance or market movement.
The Fund invests by sampling the Index, meaning that it holds a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. All of the Fund's investments will be selected through the sampling process and, under normal circumstances, at least 80% of the Fund's assets will be invested in bonds included in the Index. The Fund maintains a dollar-weighted average maturity consistent with that of the Index. As of October 31, 2024, the dollar-weighted average maturity of the Index was 8.9 years.
Principal Risks: The Fund is subject to Country/Regional Risk, Interest Rate Risk, Income Risk, Nondiversification Risk, Credit Risk, Call Risk, Index-Related Risks, Index Sampling Risk, Currency Risk and Currency Hedging Risk, and Derivatives Risk. These risks are discussed under Vanguard Investment Risks in Appendix B.
h. Schwab Treasury Inflation Protected Securities Index Fund (SWRSX)
Objective: The Fund's goal is to track as closely as possible, before fees and expenses, the total return of an index composed of inflation-protected U.S. Treasury securities.
Strategy: To pursue its goal, the Fund generally invests in securities that are included in the Bloomberg U.S. Treasury Inflation-Linked Bond Index (Series-L). The index includes all publicly-issued treasury inflation-protected securities (TIPS) that have at least one year remaining to maturity, are rated investment grade and have $500 million or more of outstanding face value. The TIPS in the index must be denominated in U.S. dollars and must be fixed-rate and non-convertible. The index is market capitalization weighted and the TIPS in the index are updated on the last business day of each month. TIPS are publicly issued, dollar-denominated U.S. government securities issued by the U.S. Treasury that have principal and interest payments linked to an official inflation measure (as measured by the Consumer Price Index, or CPI) and their payments are supported by the full faith and credit of the United States.
It is the fund's policy that, under normal circumstances, it will invest at least 90% of its net assets (including, for this purpose, any borrowings for investment purposes) in securities included in the index. The fund will notify its shareholders at least 60 days before changing this policy. The fund will generally seek to replicate the performance of the index by giving the same weight to a given security as the index does. However, when the investment adviser believes it is in the best interest of the fund, such as to avoid purchasing odd-lots (i.e., purchasing less than the usual number of shares traded for a security), for tax considerations, or to address liquidity considerations with respect to a security, the investment adviser may cause the fund's weighting of a security to be more or less than the index's weighting of the security. The fund may sell securities that are represented in the index in anticipation of their removal from the index.
Under normal circumstances, the fund may invest up to 10% of its net assets in securities not included in the index. The principal types of these investments include those that the investment adviser believes will help the fund track the index, such as investments in (a) securities that are not represented in the index but the investment adviser anticipates will be added to the index; (b) high-quality liquid investments, such as securities issued by the U.S. government, its agencies or instrumentalities, including obligations that are not guaranteed by the U.S. Treasury, and obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities, and (c) investment companies. The fund may also invest in cash and cash equivalents, including money market funds, enter into repurchase agreements, and may lend its securities to minimize the difference in performance that naturally exists between an index fund and its corresponding index.
The investment adviser typically seeks to track the price and yield performance of the index by replicating the index. This means that the fund generally expects that it will hold the same securities as those included in the index. However, the investment adviser may use sampling techniques if the investment adviser believes such use will best help the fund to track the index or is otherwise in the best interest of the fund. Sampling techniques involve investing in a limited number of index securities that, when taken together, are expected to perform similarly to the index as a whole. These techniques are based on a variety of factors, including interest rate and yield curve risk, maturity exposures, and other risk factors and characteristics. When the fund uses sampling techniques, the fund generally expects that its yield, maturity and weighted average effective duration will be similar to those of the index.
Principal Risks: The Fund is subject to Market Risk, Investment Style Risk, Inflation-Protected Security Risk, Interest Rate Risk, Credit Risk, Liquidity Risk, Sampling Index Tracking Risk, Tracking Error and Correlation Risk, Securities Lending Risk, and Money Market Fund Risk. These risks are discussed under Schwab Investment Risks in Appendix B.
i. Nationwide Life Insurance Company Group Annuity Contract
Objective: The objective of the Nationwide Life Insurance Company Group Annuity Contract is to provide a low-risk, competitive option for participants.
Strategy: The Nationwide Life Insurance Company Group Annuity Contract seeks to achieve a competitive return, consistent with, and providing for, preservation of capital, credit quality, liquidity to pay plan benefits, and reasonable tracking of interest rates. Stability and consistency while providing a competitive return are key attributes. The guaranteed minimum interest rate under the Group Annuity Contract shall never be less than 1%. This guarantee is made by Nationwide Life Insurance Company to the Program Manager and not to Account Owners. Nationwide credits interest to the Group Annuity Contract at an annual guaranteed interest rate that it declares at least 14 days prior to the rate taking effect and will be in effect for a period of 12 months. Interest rates will be reset no more frequently than annually. In addition, the first year the Group Annuity Contract is in force, the annual guaranteed interest rate may be in effect for longer than one year; the rate will reset on whichever of January 1st or July 1st occurs next after the one-year anniversary of the effective date of the Group Annuity Contract. At no time will there be an annual guaranteed interest rate declared that is lower than the guaranteed minimum interest rate. The Group Annuity Contract currently does not have any explicit asset management charges. Nationwide Life Insurance Company's compensation is derived from the difference between what it earns on investments and what it credits to the Group Annuity Contract. Costs and expenses (such as plan charges, offsets paid to the Program Manager, and any purchase payment credits issued to PA ABLE, including Nationwide Life Insurance Company's compensation) are reflected in the crediting rate. The Program Manager receives a payment from the Nationwide Life Insurance Company Group Annuity Contract for recordkeeping and administration expenses. These payments, among many other factors, impact the interest crediting rate Nationwide Life Insurance Company declares under the Group Annuity Contract. The crediting rate is determined based on Nationwide Life Insurance Company's estimate of the investment return on the general account assets supporting this Group Annuity Contract, reduced by expenses (including compensation to Nationwide Life Insurance Company). Purchase payment credits may be recouped upon termination of the Group Annuity Contract.
Principal Risks: The Nationwide Life Insurance Company Group Annuity Contract is a general account product issued by Nationwide Life Insurance Company and is backed solely by the claims paying ability of Nationwide Life Insurance Company. While the Group Annuity Contract seeks to provide a low-risk, competitive option for the policyholder, the Group Annuity Contract is not FDIC insured, is not a bank deposit and is not insured or guaranteed by the U.S. Government or any state agency and may lose value. Because the Group Annuity Contract is a fixed contract, the investment return experienced may not be similar to the returns experienced with investments with greater equity exposure. Other factors to consider include restrictions on transfers to competing investment options. Under the Group Annuity Contract, transfers to competing investment options, generally those with principal preservation as a primary objective, such as money market or short-term bond options, are not permitted, except in limited circumstances as described in the Nationwide Life Insurance Company Group Annuity Contract. Additionally, a Market Value Adjustment (MVA) may be assessed on transfers the Program Manager makes when rebalancing the investment portfolios above a certain threshold specified in the Group Annuity Contract. The Group Annuity Contract may be terminated at any time. Termination initiates the Group Annuity Contract payout period of six years from the date of termination, which may be reduced if certain market conditions are met. Withdrawals may continue to be made during the payout period. The interest credited under the contract may be lowered upon the inception of the payout period but will never be less than the guaranteed minimum interest rate.
j. The Lincoln National Life Insurance Company Stable Value Fund
Objective: The primary objective is to maximize investment income while maintaining preservation of capital.
Strategy: The Lincoln stable value fund is invested in a broadly diversified portfolio of predominantly fixed income instruments. Lincoln employs a buy and hold strategy, matching asset risk with liability risk exposure. Lincoln acts as the manager-of-managers for the portfolio, partnering with high-quality external managers. Lincoln Investment Management Company is responsible for establishing, implementing, and providing oversight for the investment strategy and risk management of Lincoln stable value products.
Principal Risks: The product is a funding agreement subject to the claims-paying ability of The Lincoln National Life Insurance Company. The Lincoln stable value fund is not FDIC-insured or registered with the SEC. Participants have daily liquidity at full book value (principal and interest) for all participant-initiated events. A 90-day equity wash provision applies for transfers to competing funds. The guaranteed interest rate is announced in advance and is guaranteed for a six-month period. Lincoln guarantees that the interest credited will never fall below the guaranteed minimum interest rate of 1.00%. An MVA may be assessed on funding agreement terminations.
k. Fifth Third Bank Deposit Account ("Deposit Account")
Objective: The Deposit Account seeks the preservation of capital.
Strategy: The Deposit Account is a bank deposit account that is designed to provide Account Owners with a liquid, interest-bearing investment option. The Deposit Account seeks to replicate market returns on short-term investments while maintaining daily liquidity, earning a competitive rate of interest, and reducing fees in comparison to other short-term investment vehicles. Interest on the Deposit Account is paid at a variable rate. Amounts deposited in the Deposit Account are insured by the Federal Deposit Insurance Corporation (FDIC), subject to applicable limits.
Principal Risks: Amounts deposited in the Deposit Account are insured by the FDIC up to $250,000 (including principal and accrued interest), subject to applicable limits. It is the Account Owner's responsibility to monitor the total amount of deposits held at Fifth Third Bank and to determine the extent of FDIC insurance coverage available. In the event Fifth Third Bank goes into receivership or a similar form of financial trouble, payments of principal plus unpaid and accrued interest will be made to the Account Owner, subject to FDIC insurance limits; there is no specific time period during which the FDIC must make such payments available. In addition, there is a risk that the Deposit Account's interest rate, in the future, could go down. The Deposit Account's interest rate paid is a variable rate, and there is no limitation as to the percentage amount the interest rate may vary. As such, interest rates may be higher or lower than the interest rates available to depositors making deposits directly with Fifth Third Bank, or other depository institutions in comparable accounts. In the event Fifth Third Bank exercises its right to close the Deposit Account, amounts invested in the Deposit Account may be required to transfer to another Investment Option. Account Owners do not have an ownership interest or any other rights as an owner of the deposits in the underlying Deposit Account. Account Owners cannot access or withdraw money from the Deposit Account by contacting Fifth Third Bank directly. At any time, PA ABLE may change the provider of the Deposit Account from Fifth Third Bank and move funds to an underlying deposit account at a new bank. In such an event, PA ABLE may invest in any other investment approved by PA ABLE. None of the Plan Administrators guarantee, in any way, the financial condition or ongoing viability of Fifth Third Bank or a replacement bank.
a. How Your Units are Valued
Contributions to your Account purchase Units of the Investment Option(s) you select. PA ABLE will process Account transaction requests (e.g., contributions, withdrawals, and transfers) at the Unit Value of the applicable Investment Option determined as of the close of business on the business day your Account transaction request has been received in good order and accepted by PA ABLE by the close of regular trading (usually 4 p.m. Eastern time) on the NYSE. PA ABLE will process Account transaction requests received in good order after the close of regular trading or on a day when the NYSE is not open for trading at the Unit Value of the applicable Investment Option determined as of the close of business on the next day of regular trading on the NYSE. PA ABLE will not process Account transaction requests on holidays or other days when the NYSE is closed for any reason. PA ABLE also reserves the right to refrain from processing Account transaction requests during any time when trading is restricted by the Securities and Exchange Commission or under any emergency circumstances.
The value of a Unit in each Investment Option is computed by dividing (a) an Investment Option's assets less any liabilities allocated to that Investment Option by (b) the number of outstanding Units of such Investment Option. Investments in stable value funds and the Deposit Account earn a rate of interest at the declared rate then in effect, which is accrued on a daily basis.
b. Treatment of Dividends and Capital Gains
Some Underlying Funds may distribute dividends and capital gains. Any dividends and capital gains will be reinvested into the Investment Options containing the Underlying Funds and will be reflected as increases or decreases in the Investment Option's Unit Value.
Additional information about the investment strategies and risks of each underlying mutual fund is available in its current prospectus and Statement of Additional Information (SAI). You can request a copy of the current prospectus, the SAI, or the most recent semiannual or annual report of any mutual fund by visiting the Investment Firms' websites or calling the phone numbers referenced above (see Part 2.C.2.b.)
Investment Option performance will be posted on PAABLE.gov as it becomes available.
The Department, in its sole discretion, will establish, and may change at any time, the fees and expenses it deems appropriate for PA ABLE. In the future, PA ABLE's fees and expenses could be higher or lower than those discussed in this PA ABLE Disclosure Statement.
D. Fees and Expenses
1. Investment Options Asset-based Fees
PA ABLE charges a total annual asset-based fee for each Investment Option, which ranges from 0.00% to 0.2473%, and which varies because of the different expenses of the Underlying Funds (the "Underlying Fund Expenses") and Administrative Fees. The Underlying Fund Expenses are received by the Investment Firms and include the expense ratio of the mutual funds used in each Investment Option. Expenses for Investment Options with multiple Underlying Funds represent a weighted average of the Underlying Fund Expenses. The Underlying Fund Expenses included in the chart below reflect expenses as of the date of this PA ABLE Disclosure Statement but may change in the future. In addition to the Underlying Fund Expenses, the total annual asset-based fees of an Investment Option include an Administrative Fee. The Administrative Fee of 0.22% is allocated to Vestwell and covers additional administrative and operational costs. The Administrative Fee may be lowered without prior notification. The total annual asset-based fee is charged daily against the assets of each Investment Option at an annualized rate approximately equal to the total annual asset-based fee.
The chart below provides the total annual asset-based fee for each Investment Option and illustrates the hypothetical expenses that you would incur over various periods if you invest $10,000 in an Investment Option. This example assumes that each Option provides a return of 5% a year and that the Option's total annual asset-based fee remains the same. Actual costs may be higher or lower. The results apply whether or not the investment is redeemed at the end of the period, but they do not take into consideration any withdrawals that are Non-qualified or otherwise subject to state or federal income taxes, or any penalties.
Fee Structure Table
(As of TBD)
|
Hypothetical $10,000 Investment Cost Chart
6
|
|
Annual Asset Based Fees
1
|
Additional Fees |
Assumes Discount for Electronic Delivery |
Assumes No Discount for Electronic Delivery |
| Investment Option |
Estimated Underlying Fund Expenses
2
|
Administrative Fee |
Total Annual Asset Based Fees
3
|
Annual Account Maintenance Fee
4
|
1 Year |
3 Year |
5 Year |
10 Year |
1 Year |
3 Year |
5 Year |
10 Year |
| 2070 |
0.0269% |
0.22% |
0.2469% |
$17 |
$42.43 |
$130.92 |
$224.62 |
$485.24 |
$62.42 |
$190.70 |
$323.98 |
$682.39 |
| 2065 |
0.0264% |
0.22% |
0.2464% |
$17 |
$42.38 |
$130.76 |
$224.34 |
$484.61 |
$62.36 |
$190.54 |
$323.70 |
$681.76 |
| 2060 |
0.0264% |
0.22% |
0.2464% |
$17 |
$42.38 |
$130.76 |
$224.34 |
$484.61 |
$62.36 |
$190.54 |
$323.70 |
$681.76 |
| 2055 |
0.0260% |
0.22% |
0.2460% |
$17 |
$42.33 |
$130.60 |
$224.07 |
$484.01 |
$62.31 |
$190.39 |
$323.44 |
$681.17 |
| 2050 |
0.0258% |
0.22% |
0.2458% |
$17 |
$42.32 |
$130.56 |
$223.99 |
$483.82 |
$62.30 |
$190.34 |
$323.36 |
$680.98 |
| 2045 |
0.0258% |
0.22% |
0.2458% |
$17 |
$42.32 |
$130.56 |
$223.99 |
$483.82 |
$62.30 |
$190.34 |
$323.36 |
$680.98 |
| 2040 |
0.0232% |
0.22% |
0.2432% |
$17 |
$42.05 |
$129.70 |
$222.50 |
$480.48 |
$62.03 |
$189.49 |
$321.87 |
$677.67 |
| 2035 |
0.0192% |
0.22% |
0.2392% |
$17 |
$41.63 |
$128.41 |
$220.25 |
$475.44 |
$61.62 |
$188.20 |
$319.63 |
$672.68 |
| 2030 |
0.0149% |
0.22% |
0.2349% |
$17 |
$41.20 |
$127.05 |
$217.88 |
$470.11 |
$61.18 |
$186.84 |
$317.27 |
$667.40 |
| Capital Preservation |
0.0000% |
0.00% |
0.0000%
5
|
$17 |
$17.00 |
$51.00 |
$85.00 |
$170.00 |
$37.00 |
$111.00 |
$185.00 |
$370.00 |
| Conservative |
0.0102% |
0.22% |
0.2302% |
$17 |
$40.72 |
$125.53 |
$215.23 |
$464.18 |
$60.70 |
$185.33 |
$314.64 |
$661.52 |
| Moderately Conservative |
0.0200% |
0.22% |
0.2400% |
$17 |
$41.72 |
$128.68 |
$220.72 |
$476.48 |
$61.70 |
$188.47 |
$320.10 |
$673.71 |
| Moderate |
0.0238% |
0.22% |
0.2438% |
$17 |
$42.11 |
$129.91 |
$222.87 |
$481.30 |
$62.09 |
$189.70 |
$322.24 |
$678.49 |
| Growth |
0.0271% |
0.22% |
0.2471% |
$17 |
$42.45 |
$130.96 |
$224.69 |
$485.39 |
$62.43 |
$190.74 |
$324.05 |
$682.54 |
| Moderately Aggressive |
0.0270% |
0.22% |
0.2470% |
$17 |
$42.44 |
$130.94 |
$224.67 |
$485.33 |
$62.42 |
$190.73 |
$324.03 |
$682.48 |
| Aggressive |
0.0273% |
0.22% |
0.2473% |
$17 |
$42.47 |
$131.02 |
$224.81 |
$485.65 |
$62.45 |
$190.81 |
$324.17 |
$682.79 |
2. Annual Account Maintenance Fee
PA ABLE charges an Annual Account Maintenance Fee of $37 ($9.25 taken quarterly) to all funded Accounts (see Part 2.A.2.b.). This fee will be discounted to $17 ($4.25 taken quarterly) for those Accounts that have established Electronic Delivery. Account Owners may receive tax forms like IRS Form 1099-QA and Form 5498-QA via mail and still qualify for the discounted fee.
The Annual Account Maintenance Fee will be deducted from the Account quarterly and will be taken first from your most conservative Investment Option, and next from more aggressive Investment Options, in increasing order of risk profile. The fee will not be deducted from those Accounts that have a zero balance. If the amount remaining in an Account is less than the fee amount, the fee will be assessed against the remaining funds.
3. Other Charges
PA ABLE reserves the right to assess the following charges on Investment Option transactions:
| Service |
Fee |
| Contribution checks returned for insufficient funds |
$25 |
| Contributions made by ACH which fail |
$25 |
| Re-issuance of Check |
$15 |
| Outgoing Wire |
$30 |
| Overnight Delivery |
$30 |
PA ABLE also reserves the right to charge reasonable additional fees if you request non-standard services. In its discretion and without further notice, PA ABLE may deduct directly from the Account the fees and expenses incurred as identified in the charts above or similar fees and expenses.
E. Making Withdrawals
1. In General
Only you, as the Account Owner (if you are an adult with the capacity to enter into a contract) or your Authorized Individual may direct withdrawals from your Account. Withdrawals may be made at any time for any reason, but there may be tax and benefit consequences for withdrawals not used for Qualified Disability Expenses.
Withdrawal requests received in good order before the close of the NYSE on any day the NYSE is open for business are processed that day based on the Unit Values of your Investment Options in your Account for that day.
Withdrawal requests received after the close of the NYSE are processed the next business day using the Unit Values of your Investment Options on that day.
Please generally allow up to 10 business days for the proceeds to reach the payee. PA ABLE generally processes withdrawals within three business days of accepting the request. During periods of market volatility and at year-end, withdrawal requests may take up to five business days to process.
There is a minimum withdrawal amount of $5.00.
2. Recontribution of Withdrawals
Except as otherwise described in this section, withdrawals cannot be recontributed back into the Account, even if you made the withdrawal by mistake. If you attempt to recontribute money that you previously withdrew, the recontribution will be treated as a new and separate contribution. The withdrawal may also be treated as a Non-Qualified Withdrawal, which could subject the Account Owner to tax consequences and have adverse effects on the Account Owner's eligibility for means-tested benefits.
PA ABLE does not consider adjustments resulting from its error or an error by any of its vendors or fraudulent Account activity to be contributions. PA ABLE, in its sole discretion, will determine if an entered withdrawal request or amount of the withdrawal is due to a mistake by PA ABLE or its vendors or to circumstances beyond the control of the Account Owner or Authorized Individual and may require documentation from the Account Owner or Authorized Individual in support of a request to rescind or void a withdrawal or portion of a withdrawal. An Account Owner or Authorized Individual may re-contribute a withdrawal or portion of a withdrawal that cannot be rescinded or voided; however, it will be treated as a new contribution as of the date the request to recontribute is received.
Any withdrawal that is recontributed, including a withdrawal that was rescinded or voided, might be considered a Non-qualified Withdrawal subject to income tax and an additional federal tax of 10% (see Part 2.E.7.e.) unless the re-contribution qualifies as a Rollover from the Account (see Part 2.E.7.c.). Such a withdrawal may also have adverse effects on the Account Owner's eligibility for means-tested benefits (see Part 3).
3. Withdrawal Payment Methods
You may designate one of several payment methods. Withdrawals may be sent by:
- ACH using saved bank information on the Account record,
- ACH to the ABLE Visa® Prepaid Card (if you have requested and activated a card),
- Check to the mailing address on the Account record, or
- Check to a third party designated by the Account Owner or Authorized Individual.
4. The ABLE Visa® Prepaid Card
The ABLE Visa® Prepaid Card is a prepaid card managed by True Link Financial, Inc. ("True Link"). Account Owners can withdraw money from their PA ABLE Account and load the funds onto the ABLE Visa® Prepaid Card to use for Qualified Disability Expenses. The card offers several customizable features. Account Owners and/or Authorized Individuals can each request a card from the PA ABLE online account portal.
To sign up for an ABLE Visa Card, the applicant must have a valid Account and must agree to the Cardholder Agreement and certain other agreements with True Link and the issuing bank. This card is issued by Sunrise Banks N.A., Sioux Falls, SD 57108, Member FDIC, pursuant to license from Visa U.S.A., Inc. Use of the card constitutes acceptance of the terms and conditions stated in the Cardholder Agreement. A copy of the Cardholder Agreement can be found at PAABLE.gov.
Provided there is no hold on your PA ABLE Account, the card will typically be received within 6-9 business days of your card request. There is no monthly fee associated with the card, but the card is subject to other related fees as detailed in the Fee chart below and as further documented in the Cardholder Agreement. Card Fees are subject to change at any time. For the most up to date information, please review the Cardholder Agreement at paable.truelinkfinancial.com.
| Fee |
Fee Description |
Fee Amount |
Details |
| Using your Card outside the U.S. |
| International Transaction Fee |
International Purchase Fee |
$2.00 |
This is the fee for an international purchase. If you make a purchase in a currency other than U.S. dollars, the amount deducted from your Card Account will be converted by Visa into U.S. dollars. Visa will establish a currency conversion rate for this convenience using a rate selected by Visa from the range of rates available in wholesale currency markets for the applicable central processing date which may vary from the rate Visa itself receives, or the government-mandated rate in effect for the applicable central processing date, in each instance. This currency conversion fee is in addition to our fee. |
| Other |
| Replacement Card |
Replacement Card Fee |
$5.00 |
This is the fee each time you request a replacement card prior to the expiration/valid thru date of your card. |
| Expedited Card |
Expedited Shipping Fee |
$30.00 |
This is the fee each time you request expedited shipping for a card. Your card will arrive in approximately 2-4 business days. You can choose standard delivery of your card for no shipping fee. |
Transaction activity can be viewed, and card statements accessed, via paable.truelinkfinancial.com. Loading an ABLE Visa Card is considered a withdrawal from your Account in the year in which the loading occurs. A maximum of 95% of your Account's available balance can be withdrawn and loaded onto the applicable ABLE Visa Card, subject to the daily and monthly load card limits shown below, and as further detailed in the Cardholder Agreement. Card load limits may change at any time. For the most up to date information, please review the Cardholder Agreement at paable.truelinkfinancial.com.
| Limitation Type |
Frequency and/or Dollar Limits (for typical transactions) |
| Card Limits |
| Maximum Card Account balance |
$20,000.00 total |
| Load Limits |
| Cash Loads |
Not allowed |
| Direct Deposits/Transfers from Your ABLE Account - Daily |
$5,000.00 total per day |
| Direct Deposits/Transfers from Your ABLE Account - Monthly |
$20,000.00 total per month |
| Spend Limits |
| Cash Withdrawals (ATM or POS) - Domestic and International |
$500.00 total per day |
| Monthly ATM Limit - Domestic |
$3,000.00 total per month |
| Monthly ATM Limit - International |
$1,000.00 total per month |
| Cash Withdrawal (Over the Counter or Quasi Cash) |
Not allowed |
| Card Purchases (Signature & PIN) - Daily |
$5,000.00 total per day |
| Card Purchases (Signature & PIN) - Monthly |
$20,000.00 total per month |
Funds may not be added to an ABLE Visa Card from any source other than your Account.
An ABLE Visa Card may not be used for online gambling or illegal transactions. The ABLE Visa Card can be used everywhere Visa debit cards are accepted. If an ABLE Visa Card has no balance for 4 or more consecutive months, True Link may automatically terminate that card without advance notice. Any withdrawal loaded onto an ABLE Visa Card from an Account is reported as a distribution for tax purposes and should be spent in the same calendar year as the distribution or in the first 60 days of the next calendar year. If you receive SSI benefits, you should also consider the potential consequences of loading funds onto an ABLE Visa Card for housing expenditures, but not spending the funds in the same calendar month that you withdrew them from your Account.
5. Withdrawal Restrictions
For your protection, withdrawals may be restricted for up to 15 days after Account opening, after contributions, or after certain changes to your Account. Generally, although subject to some exceptions, PA ABLE may impose the following withdrawal restrictions:
- Gift contributions may be subject to a hold of 10 business days (following settlement) during which they cannot be withdrawn.
- All other contributions are subject to a hold of 5 business days (following settlement) during which they cannot be withdrawn.
- New or updated bank accounts are subject to a 10 calendar day hold period before the bank account can be used for a withdrawal.
- Withdrawals cannot be sent to a new or updated mailing address for 15 calendar days after the address change.
- Withdrawals cannot be sent to a new or updated third-party (bill pay) payee for 5 calendar days after the payee is added or updated.
6. Recurring Monthly Withdrawals
You may also establish a recurring monthly Withdrawal, which is a periodic, pre-scheduled Withdrawal from any of your Investment Options. If the balance in your chosen Investment Option is less than the amount specified on your recurring Withdrawal, the Withdrawal will not be processed. Recurring Withdrawals are subject to the processing times and hold periods specified in Part 2.E.5., above.
7. Types of Withdrawals
There are several different types of withdrawals, which are determined by the purpose of the withdrawal. Each may have different tax and benefit consequences. These are as follows:
- Qualified Withdrawals: Withdrawals taken to pay for Qualified Disability Expenses.
- Rollovers: Withdrawals that are deposited into:
- An account in another qualified ABLE program of which you are the Account Owner (provided that you have not made a similar Rollover to a qualified ABLE program within the previous 12 months), or
- An account in another qualified ABLE program of which your Sibling who is an Eligible Individual is the Account Owner.
There are two types of Rollovers. Direct Rollovers are ones in which you request PA ABLE to transfer your funds directly to the other ABLE program. Indirect Rollovers are ones in which you request PA ABLE to pay the funds to you and you contribute the withdrawn amount in the other state's ABLE program.
Please note that if the Rollover is a Direct Rollover to an account of which you are the Account Owner, you must roll over the entire Account balance and close your PA ABLE Account upon completion of the transfer of funds. If the Rollover is an Indirect Rollover to an account of which you are the Account Owner, you must roll over the entire Account balance amount and close your PA ABLE Account within 60 days of the transfer of funds.
- Transfers between PA ABLE Accounts: Withdrawals taken from one PA ABLE Account and deposited into another PA ABLE Account for a Sibling, who is also an Eligible Individual of the Account Owner of the transferring Account, withdrawals taken from the PA ABLE Account whose Account Owner is deceased and deposited into the Successor Account Owner's PA ABLE Account, or withdrawals made as a result of an involuntary termination and transferred to a new PA ABLE Account for the same Account Owner, if permitted.
- Non-qualified Withdrawals: Withdrawals taken for any purpose or reason that are not Qualified Withdrawals, Rollovers, or Transfers between PA ABLE Accounts, as described above.
The necessary forms, needed documentation, permissible payees, limitations, the federal and Pennsylvania state tax consequences, and the impact on government benefits may depend on which type of withdrawal is being taken.
a. Qualified Withdrawals
i. How to Request
A Qualified Withdrawal may be requested by phone, online, or by obtaining and submitting a Withdrawal Form. To make the request by phone, call the Customer Service Center at 855-529-ABLE (2253). To make the request online, log into your account from PAABLE.gov, click on "Transfer", then "Withdrawals."
Your Qualified Withdrawal may be paid directly to you or to a third party you designate, such as a medical services provider. While the PA ABLE Program will not generally require documentation that shows the withdrawal is for Qualified Disability Expenses, PA ABLE reserves the right to do so.
ii. Tax Consequences
When withdrawn and used for Qualified Disability Expenses, the earnings on contributions to your Account are exempt from both federal and Pennsylvania state income tax as long as the funds withdrawn are used within the same calendar year or within the first sixty days of the next calendar year. Regardless of the type of withdrawal, PA ABLE is required by federal law to issue an IRS Form 1099-QA for the withdrawal. The 1099-QA specifies the principal and earnings breakdown of the withdrawal amount. The 1099-QA will be issued to the Account Owner. You should keep appropriate records to substantiate to the Internal Revenue Service and/or your state tax agency (in Pennsylvania, the Pennsylvania Department of Revenue) that the withdrawal was used for Qualified Disability Expenses. Qualified Withdrawals withdrawn during one calendar year and used to pay for a Qualified Disability Expense in the first 60 days of the next calendar year may be treated as having been paid during the previous calendar year for tax purposes. However, if you do so, you cannot count that Qualified Withdrawal again for the same purpose in the next calendar year.
iii. Government Benefit Consequences
A Qualified Withdrawal will not have any impact on your federal needs-based benefits, with the possible exception that Qualified Withdrawals for housing expenses might affect your SSI benefits if not used in the same month the withdrawal is taken. For SSI purposes, withdrawals taken with the intent of using them for non-housing Qualified Disability Expenses may be used at any time. However, if they are subsequently used for non-qualified purposes, your benefits may be affected. For further information see Part 3.B. For IRS income tax purposes, however, Qualified Withdrawals might need to be used in the same tax year that they are taken, or within the first 60 days of the next tax year, in order to be tax exempt. A Qualified Withdrawal will not have any impact on your Pennsylvania needs-based benefits related to health (including Medical Assistance), disability, or student financial aid.
b. Direct Rollovers
i. How to Request
You may directly roll over the funds in your PA ABLE Account to another state's ABLE program by obtaining a form from the ABLE plan that will receive the funds. This form should indicate that you (or the new Account Owner) have an account in the other state's ABLE program and wish the PA ABLE Program to transmit your funds to that account. The non-Pennsylvania ABLE program will send that form to the PA ABLE Program and, once the form is received, PA ABLE will send the funds directly to the non-Pennsylvania ABLE program. When the PA ABLE Program sends your funds to the receiving plan, it will include notification of the principal and earnings portions of the total amount.
ii. Tax Consequences
To be considered a non-taxable event for federal and Pennsylvania income tax purposes, Direct Rollovers to the same Eligible Individual must transfer the entire balance of the PA ABLE Account to the non-PA ABLE account and the PA ABLE Account must be closed upon completion of the Rollover. For Direct Rollovers to an Eligible Individual who is a Sibling, part or all of the balance of a PA ABLE Account may be transferred to the Eligible Individual Sibling's ABLE account.
Regardless of the type of withdrawal, PA ABLE is required by federal law to issue you an IRS Form 1099-QA for the withdrawal. The 1099-QA specifies the principal and earnings breakdown of the withdrawal amount. You should keep appropriate records to substantiate to the Internal Revenue Service and/or your state tax agency (in Pennsylvania, the Pennsylvania Department of Revenue) that the above requirements were met. If the Rollover is to an account for a new Account Owner, it may be considered a gift from the old Account Owner to the new Account Owner for federal gift and generation-skipping transfer tax purposes. Before making such a Direct Rollover, you may wish to consult a tax advisor.
iii. Government Benefit Consequences
A Direct Rollover for the same Account Owner will not have any impact on your federal needs-based benefits or your Pennsylvania benefits related to health (including Medical Assistance), disability, or student financial need. It is not clear whether or how a Direct Rollover to a new Account Owner will impact your government benefits. You may wish to consult your benefits counselor before making such a Rollover.
c. Indirect Rollovers
i. How to Request
You may make an Indirect Rollover from your PA ABLE Account to another state's ABLE program by making a withdrawal payable to yourself. To make the request online, go to PAABLE.gov, click on "Login", then "Transfers", and then "Withdrawals." To use the paper Withdrawal Form, download it from the PA ABLE website or request it by calling the Customer Service Center. To request the withdrawal by phone, call the Customer Service Center at 855-529-ABLE (2253). Once you receive the funds, contribute them to the non-Pennsylvania ABLE program.
Unless you provide the receiving program with documentation of the principal and earnings breakdown, that program will treat the entire Indirect Rollover amount as earnings. This means that if you subsequently take a Non-qualified Withdrawal, you may owe taxes on the entire amount rolled over. When making an Indirect Rollover from PA ABLE be sure to contact the Customer Service Center 855-529-ABLE (2253) to obtain documentation of the contributions and earnings.
ii. Tax Consequences
To be considered a non-taxable event for federal or Pennsylvania income tax purposes, the following requirements apply:
- An Indirect Rollover for the same Eligible Individual can be made only once in a 12-month period.
- An Indirect Rollover for an Eligible Individual who is a Sibling of the Account Owner may be made at any time.
- An Indirect Rollover to an ABLE account for the same Eligible Individual must transfer the entire balance of the PA ABLE Account to the non-PA ABLE account within 60 days of the date of the withdrawal.
- When an Indirect Rollover to an ABLE account for the same Eligible Individual occurs, the PA ABLE Account must be closed within 60 days of the date of the withdrawal.
Regardless of the type of withdrawal, PA ABLE is required by federal law to issue you an IRS Form 1099-QA for the withdrawal. The 1099-QA specifies the principal and earnings breakdown of the withdrawal amount. You should keep appropriate records to substantiate to the Internal Revenue Service and/or your state tax agency (in Pennsylvania, the Pennsylvania Department of Revenue) that the above requirements were met. If the Indirect Rollover is to an account for a new Account Owner, it may be considered a gift from the old Account Owner to the new Account Owner for federal gift and generation-skipping transfer tax purposes. Before making such an Indirect Rollover, you may wish to consult a tax advisor.
iii. Government Benefit Consequences
The government benefit consequences for an Indirect Rollover are the same as a Direct Rollover. See Part 2.E.7.b (iii).
d. Transfers between PA ABLE Accounts
i. How to Request
You may withdraw assets from your PA ABLE Account and transfer them to another PA ABLE Account for a different Account Owner, including a Successor Account Owner ("Transfer"). However, the Account Owner of the Account to which the assets are going must be an Eligible Individual and be a Sibling of the Account Owner of the Account from which they are transferred. Please visit PAABLE.gov or call 855-529-ABLE (2253) for instructions on how to complete a Transfer.
ii. Tax Consequences
The tax consequences for a Transfer between PA ABLE Accounts are the same as a Direct Rollover. See Part 2.E.7.b (ii).
iii. Government Benefit Consequences
The government benefit consequences for a Transfer between PA ABLE Accounts are the same as a Direct Rollover. See Part 2.E.7.b (iii).
e. Non-qualified Withdrawals
i. How to Request
A request for a withdrawal other than for the purposes or reasons discussed above (a Non-qualified Withdrawal) from your Account may be requested online, by phone, or by obtaining and submitting a Withdrawal Form. To make the request online, go to PAABLE.gov, click on "Login", then "Transfers," and then "Withdrawals." To request by phone, call the Customer Service Center at 855-529-ABLE (2253). To use the paper Withdrawal Request Form, download it from PAABLE.gov or request it by calling the Customer Service Center at 855-529-ABLE (2253).
ii. Tax Consequences
Generally, the earnings portion of a Non-qualified Withdrawal will be subject to federal income taxes at the ordinary income tax rate of the Account Owner and an additional federal tax of 10%. Additionally, Account Owners who are Pennsylvania taxpayers will be subject to state income taxes. Taxpayers of other states may also be subject to their state's income taxes. PA ABLE will issue to the Account Owner a Form 1099-QA for all withdrawals that will specify the principal and earnings portions of the total withdrawals. In the event of a return of Excess Contributions (see Part 2.B.2.), a Form 1099-QA will also be issued to the contributor.
There are a number of exceptions to the federal 10% penalty. They are:
- Withdrawals paid to the estate of an Account Owner on or after the Account Owner's death;
- Withdrawals paid to an heir or legatee of the Account Owner on or after the Account Owner's death;
- Withdrawals paid as any part of a claim filed against the Account Owner or the Account by a state under a state Medicaid (Medical Assistance) plan;
- Earnings on contributions returned because they would have exceeded the Annual Contribution Limit;
- Earnings on contributions returned because they would have exceeded the total Account Balance Limit for Contributions; or
- Earnings on contributions to additional purported ABLE accounts withdrawn by the due date (including extensions) of the Account Owner's tax return for the year in which the relevant contributions were made.
8. Withdrawal Upon Termination
a. General
The Pennsylvania Enabling Law specifies that the Department may close an account without being directed to do so by the Account Owner or Authorized Individual if necessary to comply with federal law or, if the Department determines in its sole discretion that closing the account is in the best interest of PA ABLE or the Account Owner. Anyone aggrieved by the Department's decision to close an account may file an administrative appeal.
b. Causes for Termination
Examples of circumstances that might cause the Department to terminate an Account include but are not limited to: (1) the Account must be closed in order to comply with Federal or Pennsylvania law, (2) PA ABLE finds that the Account Owner or Authorized Individual has provided false or misleading information, (3) suspicious or possible fraudulent activity is observed on the Account, (4) the Account Owner or Authorized Individual has violated the terms of the PA ABLE Contract — for example, by failing to advise PA ABLE of a change in the Account Owner's disability that would make him or her no longer an "Eligible Individual" or by failing to produce documentation when requested to, (5) the Account does not contain any funds and maintains a "zero dollar balance" for a period of 90 calendar days, (6) the Department receives a written request for termination (see Part 2.E.6.c. for more information), or (7) PA ABLE may be required to close an Account deemed by the laws of the state of the Account Owner's residence to be abandoned or unclaimed and relinquish the assets to that state. (See Part 6.G. for more information.)
An Account Owner or Authorized Individual whose Account has been terminated may appeal that action to the State Treasurer by filing a Petition for Review within 30 days of the mailing date of the notice of termination. Petitions shall be filed with the Prothonotary, Office of Chief Counsel, Room 127, Finance Building, Harrisburg, Pennsylvania 17120. Petitions must be in writing, be signed by the petitioner and contain the following:
- The petitioner's name, mailing address and telephone number;
- The name, address and telephone number of the authorized representative, if any;
- A detailed statement in separate numbered paragraphs of the facts and grounds relied upon. If based upon a written document, a copy of the document, or the material part of the document, shall be attached;
- A statement specifying the relief to which the petitioner deems itself entitled, which cites the legal authority relied upon;
- A statement that either a hearing is requested or the right to a hearing is waived and the petitioner is resting the case on the petition and record, with or without a brief;
- A signed statement certifying that the facts contained in the petition are true and correct to the petitioner's knowledge and belief, and that the petition is not made for the purposes of delay.
Upon receipt of a timely filed appeal, the Department will designate a presiding officer to exercise the powers and duties of the State Treasurer with respect to all matters concerning the Petition for Review. A final determination of the presiding officer will be considered the final decision of the State Treasurer and may be appealed to the Pennsylvania Commonwealth Court. An appeal to Commonwealth Court must be filed within 30 days of the mailing date of the final decision of the State Treasurer.
c. Written Request for Termination
The Department may terminate an account upon receipt of a written request for termination by the Account Owner of an Account for which there is an Authorized Individual, if, in its sole discretion, the Department deems the termination to be in the best interest of the Account Owner and if:
The Account Owner has reached age 21 and is not subject to a valid judicial guardianship order or other court order granting to another person or entity authority over the finances of the Account Owner, and no written objection has been timely filed by the Authorized Individual after having received notice of the petition for termination.
The Department will not terminate an Account upon the petition of an Account Owner that is the subject of a valid guardianship order or other court order granting to another person or entity authority over the finances of the Account Owner unless the guardian has provided his or her written consent.
Copies of the request for termination shall be provided to the Authorized Individual and to the guardian of the Account Owner if applicable. Objections to any termination petition shall be filed with PA ABLE no more than sixty (60) days after the filing of the termination petition. All objections to terminations must include a verified copy of a petition that has been filed with a court of competent jurisdiction seeking authority over the finances of the Account Owner. Failure to provide timely proof that such petition has been filed with a court of competent jurisdiction will be deemed a waiver of the objection.
If the Department receives a timely written objection to the termination request, the Department will refrain from acting on the request to terminate until the court issues its decision. From the time a request to terminate is presented to the Department until the Department grants or denies the petition, no withdrawals may be made from the Account.
d. Value of Account Upon Termination
In the case of a termination because the Account Owner or Authorized Individual has provided false or misleading information or has violated the terms of the PA ABLE Contract, the market value of the Account on the date of the termination will be paid to the Account Owner as a Non-qualified Withdrawal except that PA ABLE may, in its discretion, withhold, and the Account Owner shall forfeit, all earnings on contributions, if any, accumulated in the Account, or such lesser amount as PA ABLE deems necessary in PA ABLE's discretion in light of such false or misleading information or violation of the terms of the PA ABLE Contract. In addition to any withholding, any fees paid on the Account will not be refunded and will be forfeited by the Account Owner.
In all other terminations, the Account will be paid to the Account Owner in the amount of its market value on the date of the termination. Such terminations shall not preclude the Account Owner or an Authorized Individual from contributing the amount paid to the Account Owner as a Transfer to a different PA ABLE Account or an Indirect Rollover to another state's ABLE account.
F. Account Security
1. In General
Contact Customer Service at 855-529-ABLE (2253) immediately if you believe that your Account has been accessed in an unauthorized manner or your Account information has been released to an unauthorized individual.
2. Online Account Security
If you choose to access your Account online, please keep your username and password confidential. PA ABLE and the Plan Administrators will honor instructions from any person who provides correct identifying information, and are not responsible for fraudulent transactions they believe to be genuine according to these procedures. Accordingly, Account Owners bear the risk of loss if unauthorized persons obtain their username and password and conduct any transaction on their behalf. Account Owners can reduce this risk by checking their account information regularly, which will give them an opportunity to prevent multiple fraudulent transactions.
You should avoid using passwords that can be guessed and should consider changing your password frequently. PA ABLE employees or representatives will not ask you for your password. Contact Customer Service at 855-529-ABLE (2253) immediately if you believe that your online account has been accessed in an unauthorized manner or your username and/or password have been released to an unauthorized individual.
It is solely your responsibility to protect your Account, diligently monitor all transactions in it, and to protect the security of your Account credentials and the email account associated with your Account. You should use multi-factor authentication as one way, but not the only way, to minimize the risk of unauthorized transactions in your Account. You are also solely responsible for updating your Account with your current contact information and keeping your Account profile current at all times while you participate in PA ABLE.
If you notice a transaction in your Account that you did not make or authorize, it is your responsibility to contact PA ABLE immediately. Any delay or failure in reporting any unauthorized transactions could affect the ability to recover funds from any unauthorized transaction and could result in a partial or total loss of your Account. PA ABLE, along with the Plan Administrators, their parent companies, and affiliates, will not be responsible for any losses that are caused in whole or in part by your failure or negligence in monitoring or protecting your Account or timely reporting any potential unauthorized transactions to PA ABLE.
PA ABLE Accounts are not savings accounts, demand deposit accounts, or any other type of accounts for purposes of the Electronic Funds Transfer Act, 15 U.S.C. §§ 1693 et seq., Regulation E, 12 CFR Part 1005, et. seq., the Consumer Financial Protection Act, the federal or any state Uniform Commercial Code or any similar state, federal or local consumer protection law ("Consumer Law"). Withdrawals or other distributions from your Account are also not electronic fund transfers within the meaning of Consumer Law.
