program disclosure statement and participation agreement · reviewed this program disclosure...
TRANSCRIPT
Program Disclosure Statement and Participation Agreement
February 28, 2019
Use of this Program Disclosure StatementThis Program Disclosure Statement is for use byindividuals opening accounts in, and personscontributing to, Enable Savings Plan Alabama(“Enable Alabama” or the “Plan”). This ProgramDisclosure Statement contains importantinformation about establishing and maintaining aPlan account. You should carefully read thisProgram Disclosure Statement before opening anaccount or investing in the Plan. No one isauthorized to provide information that is differentfrom the information contained in this ProgramDisclosure Statement. Please keep this ProgramDisclosure Statement and all updates for futurereference.
About Enable AlabamaIn 2015, the Alabama legislature created theAchieving a Better Life Experience Program(“Alabama ABLE Program”) under the laws of theState of Alabama. See Alabama Act 2015-442.Under that program, the Alabama legislaturecaused the Board of Directors of the AlabamaCollege Education Savings Program to alsobecome the Board of Directors of the ABLEProgram (“ABLE Board”) and to govern thefiduciary trust entitled the ABLE Trust Fund.Under the Alabama ABLE Program, the ABLEBoard is permitted to create its own standalonequalified ABLE program or to contract withanother state to participate in another state’squalified program. After reviewing the optionsand opportunities created by establishing its ownstandalone ABLE program and comparing suchoptions to participating in another state’sprogram, the ABLE Board determined at this timethe efficiencies and cost savings that can berealized by participating in another state’squalified ABLE program produced the greatestresult for the residents of the State of Alabama.Therefore, in furthering such determination, theABLE Board authorized the State of Alabama toparticipate under the State of Nebraska’s EnablePlan, creating Enable Alabama.
Enable Alabama is issued by The NebraskaAchieving a Better Life Experience Program Trustand administered by the Nebraska State
Treasurer, who serves as trustee to the Plan. ThePlan offers a series of investment options withinthe Nebraska Achieving a Better Life ExperienceProgram Trust. The Plan is intended to operate asa qualified ABLE program, pursuant to InternalRevenue Code Section 529A, which was adoptedas part of The Stephen Beck, Jr., Achieving aBetter Life Experience Act of 2014, as amended(the “ABLE Act”).
The ABLE Act permits states and state agenciesto establish plans that allow eligible individuals tosave for qualified disability expenses on atax-advantaged basis without jeopardizingeligibility for federal means-tested benefits, suchas Supplemental Security Income (“SSI”). See“Part 1 – Overview” for additional information;“Part 12 – Glossary” for definitions of “EligibleIndividuals” and “Qualified Disability Expenses”;and “Part 9 – Supplemental Security IncomeGuidance” for more information about how yourPlan participation may affect SSI benefits.
Accounts in Enable Alabama have not beenregistered with the Securities and ExchangeCommission (the “SEC”) or with any statesecurities commission pursuant to exemptionsfrom registration available for securities issued bya public instrumentality of a state. Neither theSEC nor any state securities commission hasreviewed this Program Disclosure Statement andParticipation Agreement (“Program DisclosureStatement”).
No insurance and no guaranteesOpening an account in Enable Alabama involvescertain risks, including possible loss of theprincipal amount invested. These risks arehighlighted in “Part 6 – Certain Risks toConsider.”
Except as described herein for accountsinvested in the Bank Savings InvestmentOption or the Checking Investment Option,accounts in Enable Alabama are not insuredby the Federal Deposit Insurance Corporation(FDIC). Accounts in Enable Alabama are notguaranteed or insured by the State ofAlabama, the State of Nebraska or their
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
1
officials/employees, the Nebraska InvestmentCouncil, the Alabama State Treasurer, theNebraska State Treasurer, the Nebraska StateInvestment Officer, First National Bank ofOmaha or its authorized agents or theiraffiliates, or any other federal or state entityor person.
The value of the account may vary depending onmarket conditions, the performance of theInvestment Options you select, the timing ofpurchases, and fees. The value of the accountcould be more or less than the amount youcontribute to the account. In short, you could losemoney.
FDIC insurance is provided for the Bank SavingsInvestment Option, which invests in an FDIC-insured omnibus savings account held in trust bythe Enable Savings Plan at First National Bank ofOmaha (the “Bank”), and the CheckingInvestment Option which invests in an FDIC-insured checking account held in trust by theEnable Savings Plan at Fifth Third Bank.Contributions to, and earnings on, theinvestments in the Bank Savings InvestmentOption and the Checking Investment Option areinsured by the FDIC on a per participant, pass-through basis to each Account Owner up to themaximum limit established by federal law, whichcurrently is $250,000.
Participation in Enable Alabama does notguarantee that contributions and the investmentearnings, if any, will be adequate to cover futurequalifying disability expenses.
For use only for Qualified Disability ExpensesEnable Alabama is intended to be used only tosave for Qualified Disability Expenses. EnableAlabama and any tax information contained in thisProgram Disclosure Statement are not intendedto be used, nor should it be used, by anytaxpayer for the purpose of evading federal orstate taxes or tax penalties. Taxpayers may wishto seek tax advice from an independent taxadvisor based on their own particularcircumstances.
Alabama state income tax considerationsContributions to Enable Alabama are notdeductible for Alabama state income taxpurposes. See Part 10 – “Federal and State TaxConsiderations” for more information on state taxconsiderations.
Taxpayers and residents of other statesDepending on the laws of any state in which youpay income taxes, favorable state tax treatment orother non-tax benefits offered by that state forinvesting in qualified ABLE programs may beavailable to you. Such tax treatment or benefitsmay be limited to amounts that you invest in thatstate’s qualified ABLE program. Any state-basedbenefit(s) offered with respect to a particularqualified ABLE program should be one of manyappropriately weighted factors to be consideredin making an investment decision.
Privacy policyExcept as otherwise required or permitted by law,any information regarding an Enable AlabamaAccount Owner or Authorized Individual will notbe shared with anyone other than the AccountOwner or an Authorized Individual, or thoseemployers and/or service providers who accesssuch information to provide services to theAccount Owner.
Conflicts with applicable lawThis Program Disclosure Statement is forinformational purposes only. In the event of anyconflicts between the description of the Plancontained herein and any requirement of federal,Alabama or Nebraska law applicable to mattersaddressed herein, such legal requirement wouldprevail over this Program Disclosure Statement.
Information is subject to changeStatements contained in this Program DisclosureStatement that involve estimates, forecasts, ormatters of opinion, whether or not expressly sodescribed herein, are intended solely as such andare not to be construed as representations of factor guarantee of future performance.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
2
Not an offer to sellThis Program Disclosure Statement does notconstitute an offer to sell or the solicitation of anoffer to buy, nor may there be any sale of asecurity described in this Program DisclosureStatement by any person in any jurisdiction inwhich it is unlawful for such person to make anoffer, solicitation, or sale.
This Program Disclosure Statement is datedFebruary 28, 2019.
IMPORTANT LEGAL INFORMATIONENABLE ALABAMA AND ITS AUTHORIZEDAGENTS OR AFFILIATES MAKE NOREPRESENTATIONS REGARDING THESUITABILITY OF THE INVESTMENT OPTIONSDESCRIBED IN THIS PROGRAM DISCLOSURESTATEMENT FOR ANY PARTICULAR INVESTOR.OTHER TYPES OF INVESTMENTS AND OTHERTYPES OF INVESTMENT VEHICLES MAY BEMORE APPROPRIATE DEPENDING ON YOURPERSONAL CIRCUMSTANCES. YOU SHOULDCONSULT YOUR TAX, INVESTMENT, ORDISABILITY BENEFITS ADVISOR(S) FOR MOREINFORMATION.
THE INFORMATION IN THIS PROGRAMDISCLOSURE STATEMENT IS SUBJECT TOCHANGE WITHOUT NOTICE, AND NEITHERDELIVERY OF THIS PROGRAM DISCLOSURESTATEMENT NOR ANY SALE MADEHEREUNDER SHALL, UNDER ANYCIRCUMSTANCES, CREATE ANY IMPLICATIONTHAT THERE HAS BEEN NO CHANGE IN THEAFFAIRS OF ENABLE ALABAMA SINCE THEDATE OF THIS DOCUMENT.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
3
KEY FEATURES AND REFERENCE GUIDE
This section is intended to provide a summary of who is eligible, background on the Plan structure,and key features of the Plan. Before investing you should read and understand the complete detailedinformation contained in this Program Disclosure Statement.
Plan structureIssuer: The Nebraska Achieving a Better Life Experience Program TrustParticipating State: AlabamaTrustee: Nebraska State TreasurerInvestment Oversight: Nebraska Investment CouncilProgram Manager: First National Bank of OmahaDistributor/Underwriter: First National Capital Markets, Inc.The Distributor and Program Manager are affiliated companies.
Contact InformationPhone: Toll-free at 866-833-7949 Monday - Friday 8:00 a.m. to 8:00 p.m. CTEnable Savings Plan AlabamaP.O. Box 30274Omaha, NE 68103-1374Web: www.EnableAL.com
KEY FEATURES
Topic Description ReferencePage
Preservingeligibility for
federal means-tested benefits
‰ The Plan provides Eligible Individuals with the potential tosave while preserving eligibility for federal means- testedbenefits
‰ Balances of up to $100,000 will be disregarded forpurposes of determining eligibility to receive benefitsunder the Supplemental Security Income program
10, 36-37
Alabama StateIncome Tax
Benefits
‰ Contributions are not deductible from Alabama stateincome tax.
‰ Earnings grow free from Alabama state income tax‰ The earnings portion of a Qualified Withdrawal is exempt
from Alabama state income tax
2, 42-43
Federal TaxBenefits
‰ Contributions are not deductible for federal income taxpurposes
‰ Earnings grow tax-deferred from federal income tax‰ No federal income tax on Qualified Withdrawals or
Rollovers‰ For federal gift and estate tax purposes, contributions are
generally considered completed gifts to the AccountOwner
11, 38-43
4
Key features and reference guide
KEY FEATURES
Topic Description ReferencePage
Preservingeligibility for
Alabama statebenefits
‰ Assets in or income from an account are not included indetermining eligibility for the following Alabamaprograms: (1) aid to dependent children; (2) SupplementalNutrition Assistance Program; or (3) Alabama child caresubsidy program.
10
Enrollment Form ‰ Enroll online at www.EnableAL.com‰ Download a form from www.EnableAL.com
12-13
AccountOwnership
‰ Only an Eligible Individual may be an Account Owner‰ Must have a Social Security or taxpayer identification
number and a U.S. residential street address‰ No joint account ownership‰ An Eligible Individual can only have one ABLE account
nationwide‰ May be transferred to another Eligible Individual during
the life of the Account Owner
13
AuthorizedIndividual
‰ May be the holder of a valid power of attorney or, if none,the Eligible Individual’s parent or legal guardian. TheAuthorized Individual is not the Account Owner and maynot have a beneficial interest in the account
12-13, 45
Contributions ‰ Contributions can be made by anyone but the Account Ownerretains ownership and control of the account and its assets
‰ Can be made online, automatically contributed from achecking or savings account, by check, wire transfer,payroll deduction, or electronic funds transfer
‰ The minimum initial contribution amount is $50 peraccount unless you sign up for the Automatic InvestmentPlan or payroll deduction
‰ The minimum subsequent contribution amount is $25, butis waived if you are signed up for Automatic InvestmentPlan or payroll deduction
‰ Annual Contribution Limit is currently $15,000 from all sources‰ Contributions by an employed Account Owner who has
earned income during the current calendar year may beable to exceed the Annual Contribution Limit by the lesserof (a) the compensation included in the Account Owner’sgross income for the taxable year, or (b) the federalpoverty line for a one-person household as determined forthe calendar year preceding the calendar year in which thetaxable year begins.
‰ Account Balance Limit of up to $400,000 per AccountOwner. Assets can grow beyond $400,000 from earnings.
16-21
5
Key features and reference guide
KEY FEATURES
Topic Description ReferencePage
InvestmentOptions
‰ 5 Investment Options– 3 Target-Risk Options (Growth, Moderate, Conservative)– 1 Bank Savings Investment Option– 1 Checking Investment Option
‰ Funds can be moved from one Investment Option toanother twice per calendar year
‰ Transferring assets among plans administered by theNebraska State Treasurer is considered an InvestmentOption change
22-26,49-53
Performance ‰ Performance of the Investment Options 27
Plan Fees andExpenses
‰ $45 annual account fee (assessed $11.25 quarterly)‰ No enrollment, investment change, transfer or
distribution fee‰ Investment Option Cost Range: 0.50% - 0.55%
– These costs include a 0.50% Program Management Feeto cover administrative costs of overseeing, distributingand marketing the Plan.
30-33
Distributions ‰ Assets in the account can be used to pay for the AccountOwner’s Qualified Disability Expenses
‰ Your account must maintain or have a minimum balance of$50.
‰ The earnings portion of withdrawals not used for qualifiedexpenses generally are subject to federal income taxes,may be subject to an additional 10% federal tax unless anexception applies, and may be subject to state or localtaxes.
34-35
Rollovers ‰ Funds can be rolled over from another qualified ABLEprogram to this Plan or from this Plan to another qualifiedABLE program once every 12 months for the same AccountOwner without being subject to federal tax
‰ A Rollover to another Account Owner who is an EligibleIndividual and a Member of the Family of the currentAccount Owner can take place at any time without federalincome tax consequences
‰ Funds can be rolled over from a qualified tuition programto this Plan without being subject to federal tax, providedthe Plan account is owned by the designated beneficiary ofthe qualified tuition program account, or a Member of theFamily of such designated beneficiary
‰ See “Part 10 – Federal and State Tax Considerations” formore information on Rollovers.
19
6
Key features and reference guide
KEY FEATURES
Topic Description ReferencePage
Risk Factors Opening an account involves certain risks, including:
‰ The risk that the value of your account may decrease, youcould lose money, including the principal you invest;
‰ The risk of state or federal tax law changes;‰ The risk of Plan changes, including changes in fees; and‰ The risk of certain balances in and certain distributions
from your account adversely affecting your eligibility forfederal or state benefits.
28-29
No Guarantees ‰ There are no guarantees that contributions and theinvestment earnings, if any, will be adequate to coverfuture Qualified Disability Expenses
‰ Except for the Bank Savings Investment Option and theChecking Investment Option, investments in EnableAlabama are not insured by the FDIC
‰ Investments in Enable Alabama are not guaranteed orinsured by the State of Alabama, the State of Nebraska ortheir officials/employees, the Nebraska Investment Council,the Alabama State Treasurer, the Nebraska StateTreasurer, the Nebraska State Investment Officer, FirstNational Bank of Omaha or its authorized agents or theiraffiliates, or any other federal or state entity or person
‰ The value of your account could be more or less than theamount you contribute to your account. In short, you couldlose money.
1-2, 25-28
7
TABLE OF CONTENTS
PART 1 – OVERVIEW ...................................................................................................................................9
PART 2 – OPENING AND MAINTAINING AN ACCOUNT ...............................................................................12
PART 3 – CONTRIBUTING TO AN ACCOUNT ...............................................................................................16
PART 4 – INVESTMENT OPTIONS ...............................................................................................................22
PART 5 – PERFORMANCE ..........................................................................................................................27
PART 6 – CERTAIN RISKS TO CONSIDER .....................................................................................................28
PART 7 – PLAN FEES AND EXPENSES .........................................................................................................30
PART 8 – DISTRIBUTIONS FROM AN ACCOUNT ...........................................................................................34
PART 9 – SUPPLEMENTAL SECURITY INCOME GUIDANCE ...........................................................................36
PART 10 – FEDERAL AND STATE TAX CONSIDERATIONS.............................................................................38
PART 11 – OTHER CONSIDERATIONS .........................................................................................................44
PART 12 – GLOSSARY ................................................................................................................................45
EXHIBIT A – PARTICIPATION AGREEMENT .................................................................................................46
EXHIBIT B – MUTUAL FUNDS DESCRIPTIONS ..............................................................................................49
8
PART 1 – OVERVIEW
EligibilityAn individual may open an account if he or she isan Eligible Individual under Code Section 529A.An individual is an Eligible Individual for a taxableyear if, during that year the individual:
• is entitled to benefits based on blindness ordisability under Title II or XVI of the SocialSecurity Act, (“Benefits Eligibility”); or
• certifies with the Program Manager that he orshe meets the requirements of the ABLE Actand the Plan (“Certification Eligibility”).
The federal tax regulations proposed by the U.S.Department of the Treasury (“U.S. Treasury”) andthe Internal Revenue Service (“IRS”) for qualifiedABLE programs provide that each qualified ABLEprogram may determine the evidence required toestablish an individual’s eligibility. The Plan willrequire, at a minimum, the certifications requiredbelow for the applicable eligibility type.
Benefits Eligibility – If an individual desires toopen an account based on Benefits Eligibility, theindividual must make the following certificationsunder penalties of perjury:
• he or she has received a benefit verificationletter from the Social Security Administrationand agrees to retain and provide the letter (ora genuine copy of the letter or other evidence)to the Plan, the Trustee, the IRS, or the U.S.Treasury upon request; and
• the individual’s disability was present beforethe individual attained age 26.
For more information about benefits based onblindness or disability under Title II or XVI of theSocial Security Act please see https://www.ssa.gov/disability/professionals/bluebook/general-info.htm(last accessed January 1, 2019) or contact your localSocial Security Field Office.
Certification Eligibility – If an individual desires toopen an account based on Certification Eligibility,the individual must make the followingcertifications under penalties of perjury:
• he or she has a medically determinablephysical or mental impairment, which results in
marked and severe functional limitations, andwhich (i) can be expected to result in death or(ii) has lasted or can be expected to last for acontinuous period of not less than 12 months;
• he or she is blind (within the meaning of theSocial Security Act); or
• he or she has a condition listed in the ‘‘List ofCompassionate Allowances Conditions’’maintained by the Social SecurityAdministration (at www.socialsecurity.gov/compassionateallowances/ conditions.htm).
The individual must also certify that (i) thedisability, blindness, or compassionate allowancescondition occurred before the date of theindividual’s 26th birthday; and (ii) he or she has acopy of his or her diagnosis relating to therelevant impairment(s), signed by a physicianmeeting the criteria of Social Security Act Section1861(r)(1). The individual agrees to retain andprovide a copy of the diagnosis and relatedinformation to the Plan upon request.
No longer eligible – By maintaining an account,the Account Owner is making a continuingcertification that the Account Owner is an EligibleIndividual. It is the Account Owner’s responsibilityto notify Enable Alabama in writing if the AccountOwner ceases to be an Eligible Individual. It isalso the Account Owner’s responsibility to notifythe Plan in writing if the Account Ownersubsequently re-qualifies as an Eligible Individual.The Plan will send annual reminder notices toAccount Owners or their Authorized Individuals oftheir responsibilities in this regard. See “Part 10 –Federal and State Tax Considerations” for moreinformation on the federal income tax treatmentof expenses during periods when the AccountOwner is no longer an Eligible Individual.
The Trust and the PlanThe Nebraska Achieving a Better Life ExperienceProgram Trust (the “Trust”), established onMay 28, 2015, is designed to qualify as atax-advantaged qualified ABLE program underSection 529A of the Internal Revenue Code of1986, as amended (the “Code”). Section 529Apermits states and state agencies to sponsor
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
9
Overview
qualified ABLE programs under which you can contribute to an account for the benefit of any Eligible Individual, including yourself (an “Account Owner”). The Trust is comprised of two plans, the Nebraska Enable Savings Plan (“Enable Savings Plan”) and the Enable Savings Plan Alabama (“Enable Alabama” or “Plan”).
The primary purpose of the Trust and Plan is to provide Eligible Individuals with a convenient and tax-advantaged way to save for Qualified Disability Expenses. Amounts contributed to the Plan are invested in the Trust. Each account in the Plan represents an interest in the Trust and holds units of one or more underlying investment options (each an “Investment Option”) in the Plan.
The Plan is offered by the State of Alabama, and is overseen by the Nebraska State Treasurer, as Trustee of the Trust. The State of Alabama, through the ABLE Board, contracted with the Nebraska State Treasurer to participate in and create Enable Alabama as part of the Trust. As Trustee, the Nebraska State Treasurer is responsible for the overall administration of the Plan. The Plan is subject to the rules and regulations established by the Nebraska State Treasurer.
The Nebraska Investment Council is responsible for investment oversight for the Trust and the Plan. The Nebraska Investment Council is responsible for the investment of money in the Trust and the selection of all Investment Options.
The Program ManagerThe Nebraska State Treasurer, as Trustee, has entered into a Program Management Agreement with First National Bank of Omaha (the “Program Manager”). Under this five-year contract (ending June 30, 2021, with the potential for two additional one-year terms), the Program Manager provides day-to-day administrative and marketing services to the Plan.
The Program Manager has entered into a distribution agreement with First National Capital Markets, Inc. (the “Distributor”). The Distributor works with the Program Manager to assist in
marketing the Enable Alabama Program. TheDistributor and Program Manager are affiliatedcompanies.
Preserving eligibility for federalmeans-tested benefitsThe Plan provides Eligible Individuals with theability to save money while preserving eligibilityfor federal means-tested benefits. Accountbalances up to and including $100,000 will bedisregarded for purposes of determining SSIbenefit eligibility. Account Owners may use theamounts in their Plan accounts for both long- andshort-term needs. See “Part 9 – SupplementalSecurity Income Guidance” for more informationabout how your participation in the Plan mayaffect SSI benefits.
Preserving eligibility forAlabama state benefitsAssets in or income from an account are notincluded in determining eligibility for the followingAlabama programs: (1) aid to dependent children;(2) Supplemental Nutrition Assistance Program; or(3) Alabama child care subsidy program.
Preserving eligibility forother state’s benefitsCheck the laws of the state in which you reside todetermine eligibility for your state’s programs.
Contributing to an accountAn Account Owner may only have one ABLEaccount nationwide. An account may have onlyone Account Owner. Accounts are also subject toannual contribution and account balance limits.The Annual Contribution Limit to a Plan account is$15,000.
Contributions by an employed Account Ownerwho has earned income during the currentcalendar year and has not contributed to anemployer-sponsored retirement plan, including a401(k), a 403(b) or a 457(b) plan, during thecurrent calendar year may exceed the AnnualContribution Limit by the lesser of (a) thecompensation included in the Account Owner’sgross income for the taxable year, or (b) thefederal poverty line for a one-person household asdetermined for the calendar year preceding thecalendar year in which the taxable year begins.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
10
Overview
No additional contributions may be made to anaccount when the fair market value of the accountexceeds $400,000, which is the current AccountBalance Limit. If, however, the market value of anaccount falls below the current limit, additionalcontributions will be accepted (subject to theaforementioned contribution limits).
Investment OptionsThe Plan has five Investment Options from whichto choose. The Growth Investment Option,Moderate Investment Option and ConservativeInvestment Option allocate assets among a mix ofunderlying mutual funds. The Bank SavingsInvestment Option invests in an FDIC-insuredsavings account (“Savings Account”). TheChecking Investment Option invests in an FDIC-insured checking account (“Checking Account”).
Account Owners do not (1) own shares of theunderlying mutual funds or (2) in the case of theBank Savings Investment Option or the CheckingInvestment Option, directly hold a bank account.Instead, Account Owners own an interest in theInvestment Options offered by the Plan. AccountOwners may not deposit contributions directly
into the Savings Account or Checking Account ata Bank branch.
The Investment Options have been reviewed andapproved by the Nebraska Investment Council.You can choose an Investment Option that istailored to meet your investment risk and returnprofile. See “Part 4 – Investment Options” formore information.
Federal income tax benefitsTax-Deferral – Investment earnings on yourcontributions accumulate on a tax-deferred basiswhile in your Plan account.
Qualified Withdrawals – Qualified Withdrawals areexempt from federal and Alabama income tax ifthey are used to pay for the Account Owner’sQualified Disability Expenses. For a detailedexplanation of “Qualified Disability Expenses,”see “Part 12 – Glossary.”
Non-Qualified Withdrawals – The earningsportion (if any) of a Non-Qualified Withdrawal willbe treated as ordinary income to the recipientand may also be subject to an additional 10%federal tax.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
11
PART 2 – OPENING AND MAINTAINING AN ACCOUNT
Who can open an accountAccount Owner or Authorized Individual – Anaccount may be opened to save for QualifiedDisability Expenses by (i) an Eligible Individual or(ii) an Authorized Individual on behalf of anAccount Owner.
Who is an Authorized Individual – If the AccountOwner is unable to exercise signature authorityover his or her account or chooses to establish anaccount but not exercise signature authority, anAuthorized Individual may act on the AccountOwner’s behalf with respect to the account. TheAuthorized Individual may be a person granted avalid power of attorney to invest monies on theAccount Owner’s behalf and to take all necessaryactions on behalf of the Account Owner withrespect to the account or, if none, a parent orlegal guardian of the Account Owner.
Under proposed U.S. Treasury regulations, theAuthorized Individual may neither have noracquire any beneficial interest in the accountduring the Account Owner’s lifetime and mustadminister the account for the benefit of theAccount Owner.
Social Security and taxpayer identification number– Each Account Owner must have a SocialSecurity number or taxpayer identificationnumber (including ITIN or ATIN) and a residentialU.S. street address. Proposed U.S. Treasuryregulations require the Account Owner to furnisha Social Security number or taxpayer identificationnumber so that it may be included on aninformation return to be filed with the IRS.
Limit on the number of accountsAn Account Owner may only have one ABLEprogram account nationwide at any time and willbe required to sign a verification under penaltiesof perjury upon opening an account that theAccount Owner has no other existing ABLEaccount (other than an ABLE account that willterminate with a Rollover into the Plan account).
Multiple Investment OptionsYou may select among multiple InvestmentOptions at enrollment and during the lifetime ofthe account. See “Part 4 – Investment Options.”
Contribution and account balance limitsThe Annual Contribution Limit (from all sources) is$15,000.
Contributions by an employed Account Ownerwho has earned income during the currentcalendar year and has not contributed to anemployer-sponsored retirement plan, including a401(k), a 403(b) or a 457(b) plan, during thecurrent calendar year may exceed the AnnualContribution Limit by the lesser of (a) thecompensation included in the Account Owner’sgross income for the taxable year, or (b) thefederal poverty line for a one-person householdas determined for the calendar year precedingthe calendar year in which the taxable yearbegins.
There is an Account Balance Limit of $400,000.Assets can grow beyond $400,000 withoutviolating the Account Balance Limit. See “Part 3 -Contributing to an Account” and “Part 10 -Federal and State Tax Considerations” forimportant additional information.
Restrictions on certain withdrawal requestsWhen an Account Owner or the address ischanged on an account, there is a10-business-day hold before a withdrawal can bemade. A withdrawal request must be signatureguaranteed if the request is within 10 businessdays of the change to have the withdrawalreleased before the hold period expires.
Completing and submitting anEnrollment FormTo open an account, you must complete anEnrollment Form. By completing and submittingan Enrollment Form, you agree to be bound bythe terms and conditions of the ProgramDisclosure Statement which governs your rights,benefits and obligations as an Account Owner.The current version of the ParticipationAgreement is included as Exhibit A to thisProgram Disclosure Statement.
Any amendments to the Code or Nebraska statelaws or regulations relating to the Plan mayautomatically amend the terms of yourParticipation Agreement, and the Trustee may
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
12
Opening and maintaining an account
amend your Participation Agreement at any timeand for any reason by giving you written notice ofsuch amendments.
You can obtain an Enrollment Form by:• Enrolling online at
www.EnableAL.com
• Downloading one fromwww.EnableAL.com
• Writing Enable Alabama at the contactinformation listed in “Key Features andReference Guide”
• Calling Enable Alabama toll-free at866-833-7949Monday-Friday 8:00 a.m. to 8:00 p.m.Central Time.
Required informationThe federal USA PATRIOT Act requires theProgram Manager to obtain, verify, and recordinformation that identifies each person who opensan account. You are required to provide theAccount Owner’s name, U.S. residential streetaddress, date of birth, citizenship status, andSocial Security or taxpayer identification number.An account will not be opened if you do notprovide the Program Manager with thisinformation. If the Program Manager is unable toverify the Account Owner’s identity, it reservesthe right to close the account at the nextcalculated unit price following suchdetermination, at your risk, or take other steps itdeems reasonable.
Eligibility documentation and annualre-certificationsIn order to open an account, an Eligible Individualis required to make certain eligibility certifications.See “Part 1 – Overview.” The Plan reserves theright to request copies of the documents relevantto those certifications (e.g., a benefit verificationletter from the Social Security Administration or awritten diagnosis relating to the disability from alicensed physician as defined under the SocialSecurity Act). If the required benefits verificationinformation is not supplied within 30 days of anyrequest, the Plan reserves the right to takeappropriate action, including without limitation,
the right to suspend contributions to the accountuntil the requested information is provided.
Account ownershipIndividual Account Owner – An Eligible Individualof any age, with a valid Social Security number ortaxpayer identification number and a residentialstreet address in the United States, Puerto Rico,Guam or the U.S. Virgin Islands can open anaccount and be the Account Owner. The AccountOwner must register the account with a U.S.residential street address when an account isopened but may also designate a U.S. Post Officebox to receive mail. There may only be oneAccount Owner; joint or multiple accountownership is not permitted.
Parent or legal guardian – A parent or legalguardian may open an account on behalf of anEligible Individual if the Eligible Individual has notappointed an agent under power of attorney. TheEligible Individual must be the Account Ownerand the parent or legal guardian must establishthe account as an Authorized Individual bycompleting an Enrollment Form.
Authorized Individuals with a valid power ofattorney – An Eligible Individual’s agent whoholds a valid power of attorney may open anaccount for an Eligible Individual as an AuthorizedIndividual. In order to be accepted by the Plan,the power of attorney must authorize the holderto (i) invest monies on the Eligible Individual’sbehalf and (ii) take all necessary actions on behalfof the Account Owner with respect to theaccount. The Eligible Individual must be theAccount Owner and the holder of the power ofattorney must establish the account as anAuthorized Individual by completing anEnrollment Form.
None of the State of Alabama, the State ofNebraska or their officials/employees, theNebraska Investment Council, the Alabama StateTreasurer, the Nebraska State Treasurer, theNebraska State Investment Officer, First NationalBank of Omaha or its authorized agents or theiraffiliates, or any other federal or state entity orperson will assume responsibility to ensure, or will..
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
13
Opening and maintaining an account
incur any liability for failing to ensure, that anyAuthorized Individual (i) acts within the scope ofhis or her authority, or (ii) applies assets held onbehalf of an Account Owner for proper purposes.
Maintaining and reviewing the accountThe Plan will send you confirmation statementseach time financial transactions are made (withthe exception of a systematic contributionthrough Automatic Investment Plan (“AIP”),payroll deduction, or systematic exchanges) aswell as when there are changes to the accountregistration. The Plan will also send you aquarterly statement that indicates the currentaccount balance and financial transactions madeduring the prior quarter. You can check theaccount balance and transaction history online atwww.EnableAL.com. or by calling the Plan.Contributors who are not Account Owners orAuthorized Individuals will not receive anynotification of a transaction nor will they haveany right to the account or to receive informationabout the account. Account Owners may requestthat an interested party receive quarterlystatements.
Program Manager’s right to terminate,freeze, suspend or redeem the accountThe Program Manager can terminate an accountif the Account Owner or Authorized Individualprovided false or misleading information or if theaccount reaches a zero balance. In addition, ifthere has been no activity in the account and theProgram Manager or its designee has not beenable to contact the Account Owner for a period ofat least five years, the account may be consideredabandoned under Nebraska state law. If theaccount is considered abandoned, it may, withoutauthorization from the Account Owner, betransferred to the Alabama’s Treasury Division forAlabama residents or, for residents of otherstates, to that state’s unclaimed propertydepartment. The Program Manager can freezethe account or suspend account services if theProgram Manager reasonably believes there is adispute regarding the assets in the account, thatfraudulent transactions may have occurred, uponnotification of the death of an Account Owneruntil the Plan receives required documentation in
good order and reasonably believes it is lawful totransfer account assets, if there is suspiciousconduct relating to the account, or pursuant to alawful order from a court or regulatory body ofcompetent jurisdiction.
Account errorsIf the Account Owner believes an error has beenmade in connection with the opening of anaccount (e.g., the new account’s InvestmentOption was not what the Account Ownerindicated on the Enrollment Form), or thatcontributions, withdrawals, or other transactionsin the account are incorrect, the Plan must benotified within 60 days from the date yourconfirmation or quarterly statement was mailed,whichever is earlier. If you do not notify the Planwithin 60 days, you will be considered to haveapproved the information in the confirmation orquarterly statement and to have released theState of Alabama, the State of Nebraska or theirofficials/employees, the Nebraska InvestmentCouncil, the Alabama State Treasurer, theNebraska State Treasurer, the Nebraska StateInvestment Officer, First National Bank of Omahaor its authorized agents or their affiliates, or anyother federal or state entity or person fromresponsibility for all matters covered by theconfirmation or quarterly statement, asapplicable. The Program Manager may waive the60-day notice requirement at its sole discretion inthe event that an error has occurred.
Documents must be in good orderIn order to timely process any transaction, such asopening an account in or processing acontribution to the Plan, all necessary documentsmust be in good order. Documents are in goodorder when they are fully, properly and accuratelycompleted, executed (where necessary) andreceived by the Program Manager or itsauthorized agents. For example, in order for anEnrollment Form or a contribution to be receivedin good order, certain information must beprovided. Transaction requests not in good orderwill prevent or delay the processing of requests.
Closing accountsThe Program Manager will close accounts (i) uponthe rollover of all of an Account Owner’s account..
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
14
Opening and maintaining an account
balance to another qualified ABLE program,during the life of the Account Owner, (ii) upon thetransfer of all of an Account Owner’s accountbalance to another account within the Trust, butonly during the life of the Account Owner, andonly if the receiving Account Owner is an EligibleIndividual and a Member of the Family of thecurrent Account Owner, (iii) if the Account Owneror his or her Authorized Individual requests thatthe account be closed at the time of a withdrawalof all assets in the Enable Alabama account, or(iv) when the account has a zero balance for60 calendar days and there are no pendingcontributions planned for funding the account.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
15
PART 3 – CONTRIBUTING TO AN ACCOUNT
ContributionsAny person can contribute to an Enable Alabamaaccount, but only the Account Owner may realizethe benefits of an account. For example, only theAccount Owner or an Authorized Individual maycontrol how assets are invested and used.
Contribution restrictionsAll contributions must be cash-equivalent anddenominated in U.S. dollars. Cash is notaccepted. The Program Manager will hold allcontributions up to five business days in anon-interest bearing account before a withdrawalof those assets can occur. For the CheckingInvestment Option, the contribution will be madeavailable for withdrawal from the CheckingInvestment Option on the sixth business day.
Minimum contribution amountsThe minimum initial contribution amount is $50per account unless the Account Owner signs upfor AIP or payroll deduction of at least $25 permonth. The minimum subsequent contributionamount is $25, but is waived if the AccountOwner is signed up for AIP or payroll deduction.
Limits on an accountAnnual Contribution Limit – Code Section 529Amandates an annual contribution limit for ABLEprograms. The Plan’s Annual Contribution Limit iscurrently $15,000 per Account Owner from allsources. If the Account Owner, for example, wereto contribute $10,000 to the account in a calendaryear and the Account Owner’s parent were tocontribute $5,000, the Annual Contribution Limitwould be reached and no additional contributionswould be accepted into the account until thefollowing year. This limit may increase from timeto time.
Contributions by an employed Account Ownerwho has earned income during the currentcalendar year, and has not contributed to anemployer-sponsored retirement plan, including a401(k), a 403(b) or a 457(b) plan, during thecurrent calendar year may exceed the AnnualContribution Limit by the lesser of (a) thecompensation included in the Account Owner’sgross income for the taxable year, or (b) the
federal poverty line for a one-person householdas determined for the calendar year precedingthe calendar year in which the taxable yearbegins.
Account Balance Limit – No additional contributionsmay be made for the benefit of an Account Ownerwhen the fair market value of the account exceeds$400,000. If, however, the market value of suchaccounts falls below the Account Balance Limit,additional contributions will be accepted.
Excess contributions – The Program Manager willnotify you if you or another contributor attempt tomake a contribution to an account that exceedsthe Annual Contribution Limit or the AccountBalance Limit (“Contribution Limits”). TheProgram Manager will not knowingly accept andwill reject contributions in excess of theContribution Limits. If the Program Managerdetermines that a contribution in excess of aContribution Limit has been accepted (“ExcessContribution”), the Excess Contribution and anyearnings thereon will be promptly refunded lessany amounts attributable to market lossessuffered between the date of the contribution andthe date of the refund. If a contribution is appliedto an account and it is later determined that thecontribution resulted in exceeding a ContributionLimit, the Excess Contribution and any earningswill be refunded to the contributor. Any refund ofan Excess contribution may be treated as a Non-Qualified Withdrawal.
Excess Contributions inadvertently applied to anaccount and not returned to the contributor on orbefore the due date (including extensions) of theAccount Owner’s income tax return for the year inwhich the Excess Contributions were made willresult in the imposition on the Account Owner ofa six percent (6%) excise tax on the amount ofExcess Contributions.
Allocation of contributions – At the time anaccount is established, you must select how youwant contributions allocated among theInvestment Options. This is known as yourStanding Allocation. Additional contributions willbe invested according to the Standing Allocation
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
16
Contributing to an account
unless you provide different instructions. You mayreallocate invested assets to different InvestmentOptions twice per calendar year. You can viewyour Standing Allocation any time online. You canchange your Standing Allocation anytime onlineby accessing the secure website, by downloadingand submitting a form available on the Plan’swebsite or by calling the Plan.
Systematic Exchange ProgramThe Plan permits Account Owners to takeadvantage of a Systematic Exchange Programthat would allow the exchange of a minimum of$50 from one Investment Option to anotherInvestment Option on a pre-scheduled basis(“Systematic Exchange”).
In order to establish the Systematic ExchangeProgram, you will have to deposit a minimumcontribution of at least $500 into a “source”Investment Option. When you establish aSystematic Exchange, you will be required toselect a preset dollar amount of $50 or more tobe exchanged into each of one or morepreselected “receiving” Investment Options overa preset period of time, either monthly orquarterly. Any Investment Option except theChecking Investment Option can serve as thesource Investment Option, and any InvestmentOption, including the Checking InvestmentOption, can be the receiving Investment Option.Exchanges into the Checking Investment Optionrequire two business days to process. These fundswill be available for withdrawal on the secondbusiness day.
Systematic Exchange does not ensure a profit orprotect against loss in a declining market.Systematic Exchange commits you to a presetinvestment in the receiving Investment Option(s)selected regardless of fluctuating prices.
If Systematic Exchange is selected at the time thatan account is opened or after an account isopened and is selected for new contributions, itwill be considered the initial investment strategyfor that account and not be counted toward thetwice per year investment change limit.
If Systematic Exchange is selected for moneyalready deposited into an account after anaccount is opened or if any changes to a currentSystematic Exchange Program are made, thatselection or change will be counted toward thetwice per year investment change limit.
See “Part 10 – Federal and State TaxConsiderations” for important information aboutannual investment change limits.
Contributions by non-Account OwnersAnyone can make contributions to an account.However, only the Account Owner or the AccountOwner’s Authorized Individual, if applicable,maintains control over monies in an account,regardless of their source, including the right tochange Investment Options, change AccountOwners, and make withdrawals from an account.
Contribution methodsContributions can be made to an account by:
• Contributing electronically from a bankaccount
• Check
• Wire Transfer
• Payroll deduction
• Rollover from another qualified ABLEprogram
• Rollover from a qualified tuition program
• Transfer within the Trust
• Contributions from Ugift®
Contributing electronically from abank accountAccount Owners can authorize contributions fromtheir checking or savings bank account into theirEnable Alabama account for one-timecontributions (an “Electronic Funds Transfer” or“EFT”) or prescheduled, ongoing contributionsthrough an AIP, subject to certain processingrestrictions. The bank from which the contributionis drawn must be a member of the AutomatedClearing House. You can authorize these
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
17
Contributing to an account
instructions when you complete an EnrollmentForm or, after the account is opened, online byaccessing the secure website, downloading andsubmitting a form available on the Plan’s websiteor by calling the Plan (if you have previouslysubmitted certain information about the bankaccount from which the money will be withdrawn).
For both EFT and AIP you must provide the Planwith your banking instructions. For AIP you mustalso indicate the amount and frequency you wantthe ongoing contributions to occur. If the AccountOwner does not own the bank account, the bankaccount owner must authorize in writing the useof their bank account. This can be accomplishedon the form that establishes or changes bankaccount information for the account. The bankmust be a U.S. bank and the contribution must bein U.S. dollars.
You can initiate EFT contributions, change yourbank, stop AIP, or change your AIP contributionamount or frequency online by accessing thesecure website. You can also make changes bydownloading and submitting a form available onthe Plan’s website or by calling the Plan.
If your EFT or AIP contribution cannot beprocessed because of insufficient funds orincomplete or inaccurate information, or if thetransaction would violate processing restrictions,the Plan reserves the right to suspend future EFTor AIP contributions. A $25 charge may beassessed for rejected electronic transfers frombank accounts against each account that was theproposed recipient of the attempted contribution.The Account Owner may also be responsible forany losses or expenses incurred by the InvestmentOption(s). The Plan does not charge a fee foraccepted EFT or AIP transactions.
Automatic investment plan (AIP)When you contribute to an account through AIPyou are authorizing the Plan to receive periodicautomated debits from a checking or savingsaccount at your bank, subject to certainprocessing restrictions. Your bank must be amember of the Automated Clearing House. YourAIP authorization will remain in effect until wehave received notification of its termination from
you and the Plan has had a reasonable amount oftime to act on it. AIP debits from your bankaccount will occur on the day you indicate,provided the day is a regular business day. If theday you indicate falls on a weekend or a holiday,the AIP debit will occur on the next business day.Quarterly AIP debits will be made on the day youindicate (or the next business day, if applicable).You will receive a trade date of the business dayon which the bank debit occurs.
The start date for an AIP must be at least threebusiness days from the date of submission of theAIP request. If a start date for an AIP is less thanthree business days from the date of thesubmission of the AIP request, the AIP will starton the requested day in the next succeedingperiod.
A program of regular investments cannot assure aprofit or protect against a loss in a decliningmarket.
Electronic funds transfer (EFT)If you have identified a checking or savingsaccount from which money will be withdrawn, youmay authorize the Plan to withdraw funds by EFTfor contribution into an account, or you or anotherperson may instruct the bank to send fundselectronically from a checking or savings accountto fund the Plan account. EFT contributions canbe made online, by calling the Plan or by workingwith your bank. The Plan may place a limit on thetotal dollar amount per day you may contribute toan account by EFT. See “Contribution Date”below for information on how the trade date forEFT purchase requests is calculated.
CheckChecks should be made payable to “EnableAlabama.” A contribution by mail coupon shouldaccompany the check. Contribution by mailcoupons are sent to you when an account isopened, when a transaction is performed, and instatement mailings. You can also download acontribution coupon from www.EnableAL.com. Ifa coupon is not available, include the accountnumber and name of the Account Owner on thecheck or include separate written instructions. Allchecks must be in good order. Some checks that..
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
18
Contributing to an account
will also not be accepted include: travelerschecks, foreign checks, checks dated more than180 days from the date of receipt, post-datedchecks, checks with unclear instructions, starterchecks or counter checks, credit card or bankcourtesy checks, promotional checks, third-partypersonal checks over $10,000, instant loanchecks, and any other check the Plan deemsunacceptable. Money orders are not accepted.Third-party personal checks must be payable tothe Account Owner or the Authorized Individualand be properly endorsed by the Account Owneror the Authorized Individual to the Plan.
A $25 charge may be assessed for returnedchecks against each account that was theproposed recipient of the attemptedcontribution. The Account Owner may also beresponsible for any losses or expenses incurredin the Investment Option(s).
Wire transferWire transfers are initiated from the contributor’sfinancial institution. Please call the Plan to obtaininformation regarding wire transfers.
Payroll deductionContributions can be made into an Enable Alabamaaccount from a paycheck if the employer permitsdirect deposit. Payroll deduction is made withafter-tax dollars. Account Owners initiate payrolldeduction and any changes directly with theiremployer. Mistakes made by the employer can onlybe remedied between the employee and theemployer. The Plan will not take any responsibilityfor mistakes made by the employer or employee.You must complete a payroll deduction form, or youcan set up payroll deduction by logging into theaccount at www.EnableAL.com, selecting thepayroll deduction option, and designating thecontribution amount in the instructions. You willneed to print these instructions and submit them toyour employer. Please call Enable Alabama forfurther instructions on establishing direct depositfrom your paycheck.
Rollover from another qualifiedABLE programContributions may be made by Rollover fromanother qualified ABLE program during the life of
the Account Owner. All or a portion of anAccount Owner’s account may be rolled into thePlan and deposited in a new account for the sameAccount Owner, or deposited into the account ofa Member of the Family of the Account Owner.To initiate a Rollover from another qualified ABLEprogram you must already have an EnableAlabama account. You may instruct the Plan tocontact the other qualified ABLE program directlyto request the funds from that account be sent bycheck to Enable Alabama. Contact the otherqualified ABLE program first to determine thebest approach for rolling money out of thatprogram. You can call the Plan for furtherinstructions.
The Program Manager will treat the entire amountof any contribution that is a Rollover contributionfrom another qualified ABLE program as earningsin the account receiving the contribution unlessthe Program Manager receives appropriatedocumentation showing the actual earningsportion of the Rollover contribution.
See “Part 10 – Federal and State TaxConsiderations” for more information on therequirements for tax-free Rollovers.
Rollover from a qualified tuition programAmounts from qualified tuition programs (alsoknown as college savings programs or 529accounts) can be rolled over to a Plan accountwithout federal tax penalties, provided the Planaccount is owned by the designated beneficiaryof the qualified tuition program account, or aMember of the Family of such designatedbeneficiary. Rollovers from a qualified tuitionprogram count toward the Annual ContributionLimit and any amount rolled over in excess of thatlimit is includible in the distributee’s grossincome.
See “Part 10 – Federal and State TaxConsiderations” for more information on therequirements for tax-free Rollovers.
Transfer within Enable AlabamaEnable Alabama permits the transfer of all or aportion of an Account Owner’s account balanceto another account within Enable Alabama, but
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
19
Contributing to an account
only during the life of the Account Owner. At thetime of the transfer, any transferee must be anEligible Individual and a Member of the Family ofthe transferor-Account Owner.
To initiate a transfer within Enable Alabama, youmust complete and submit a form available onthe Plan’s website or call the Plan. The totalaccount assets held on behalf of the transfereecannot exceed the Account Balance Limit. If thetransferee-Account Owner is not a Member of theFamily of the transferor-Account Owner, thetransfer is considered a Non-QualifiedWithdrawal.
Potential tax consequences of a transfer – See“Part 10 – Federal and State Tax Considerations”for information regarding the potential taxtreatment of a transfer to another AccountOwner. Transfers into the Checking InvestmentOption require two business days to process.These funds will be available for withdrawal onthe second business day.
Contributions from Ugift®
This free to use service gives Account Owners asimple way to ask family and friends to celebratebirthdays, holidays, and other events with giftcontributions to their Plan account. Giftcontributions received in good order will be heldby the Program Manager for approximately fivebusiness days before being transferred into yourPlan account.
Gift contributions through Ugift are subject to theAnnual Contribution Limit. Gift contributions willbe invested according to the Standing Allocationon file for your account at the time thecontribution is transferred. There may bepotential tax consequences of gift contributionsinvested in your account. The Account Owner andthe gift giver should consult a tax advisor formore information. Ugift is an optional service, isseparate from the Plan, and is not affiliated withthe State of Alabama, State of Nebraska or theProgram Manager. Ugift can be initiated from thePlan’s website. Ugift is a registered service markof Ascensus Broker Dealer Services, LLC.
Contribution dateContributions are considered received on thedate the contribution is reviewed and processedby the Program Manager or its authorized agents.Contributions to an account that are received ingood order before the market close (typically4 p.m. Eastern Time) on any day the New YorkStock Exchange (NYSE) is open for business aregenerally processed on that day for theInvestment Options selected. Contributions to anaccount that are received in good order aftermarket close, or on a day the NYSE is closed forbusiness, will be generally processed on the nextbusiness day.
Contributions sent by U.S. mail that arepostmarked on or before December 31 will betreated as having been made in that year even ifthe check was actually received by the ProgramManager or its authorized agents in good order inthe next year, provided the check subsequentlyclears. For EFT contributions, for tax purposes,the contributions will be considered to have beenmade in that year if the EFT was initiated on orbefore December 31 of such year, provided thefunds are successfully deducted from yourchecking or savings account by your financialinstitution.
Regardless of the calendar year for which acontribution is deductible, the trade date of thecontribution (and thus the price of the unitspurchased with the contribution) will bedetermined based on the day the contribution isreceived by the Program Manager or itsauthorized agents in good order and, withrespect to AIP contributions, you will receive thetrade date of the business day on which the debitoccurs. For EFT contributions, the followingapplies:
• Before 10 p.m. Eastern Time will be given atrade date of the next business day after thedate of receipt and will be effective at thatday’s closing price for the applicableInvestment Option. In such cases, the EFTdebit from your bank account will occur onthe second business day after the request isreceived.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
20
Contributing to an account
• After 10 p.m. Eastern Time will be given atrade date of the second business day afterthe date the request is received, and they willbe effective at that day’s closing price for theapplicable Investment Option. In such cases,the EFT debit will occur on the third businessday after the request is received. Your tradedate will be on the business day prior to yourdebit date.
Contribution PricingThe unit price for each Investment Option iscalculated at the close of regular trading on the
NYSE each day the NYSE is open for trading. Theunit price is calculated by dividing the value ofthe Investment Option’s net assets by the totalnumber of units in the Investment Optionoutstanding. The unit price is based on the valueof the Investment Option underlying investmentsas well as expenses and fees for administeringand managing Enable Alabama. See “Part 7 –Plan Fees and Expenses” for more information.No unit price is calculated for the CheckingInvestment Option.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
21
PART 4 – INVESTMENT OPTIONS
Investment OptionsContributions to an account will be invested inthe Investment Option(s) according to yourdirection. The Investment Options described inthis Program Disclosure Statement allow AccountOwners to direct funds to specific investmentcategories and strategies approved by theNebraska Investment Council. The Plan holds allassets of the Investment Options including theChecking Investment Option and the BankSavings Investment Option. Account Owners willown a beneficial interest in the Investment Optionoffered by the Plan. Account Owners who selectthe Checking Investment Option will have theability to write checks and utilize a debit card onthe Plan account established at Fifth Third Bank(“Fifth Third”). You may obtain prospectuses ofany of the underlying mutual funds in which thePlan invests by going online at any time towww.EnableAL.com.
Five Investment OptionsThere are five Investment Options.
• 3 Target-Risk Investment Options(“Target-Risk Options”)
• 1 Bank Savings Investment Option
• 1 Checking Investment Option
The three Target-Risk Options keep the sameasset allocation among a mix of mutual funds thatmay invest primarily in U.S. stocks, internationalequity, U.S. bonds, U.S. inflation protected-securities, and money market funds over the lifeof the account.
The Bank Savings Investment Option invests in anFDIC-insured savings account.
The Checking Investment Option invests in anFDIC-insured checking account.
Limited investment directionUnder federal law, the Account Owner may direct,whether directly or indirectly, the investment ofany contributions to his or her account or anyearnings on those contributions no more than twotimes in any calendar year. As a result, you are notable to select the underlying investments for your
Investment Options. Instead, contributions will beinvested according to the percentage youindicate in the Investment Options you select onthe Enrollment Form (a “Standing Allocation”).Your Standing Allocation can be changed onlineby accessing the secure website, by downloadingand submitting a form available on the Plan’swebsite, or by calling the Plan.
The Nebraska Investment Council may changethe Investment Options, and the underlyinginvestments in which each of the InvestmentOptions invest at any time without notice to you.Any such change in Investment Options orchange in underlying investments within anInvestment Option made by the NebraskaInvestment Council is not considered a change ininvestment direction by an Account Owner.
Changing Investment OptionsGenerally, an Account Owner may only changethe Investment Options in which his or heraccount is invested twice per calendar year.Therefore an Account Owner should carefullymake investment selections at the time ofenrollment. You can change the way you want toinvest future contributions anytime by changingyour Standing Allocation. See “Part 3 –Contributing to an Account.”
Investment Options in which an account isinvested can be changed online by accessing thesecure website, by downloading and submitting aform available on the Plan’s website, or by callingthe Plan toll free at 866-833-7949.
See “Part 6 – Certain Risks to Consider” for moreinformation.
Target-Risk OptionsThe Target-Risk Options are asset allocationInvestment Options that invest in a set or “static”mix of mutual funds that may invest primarily inU.S. stocks, U.S. bonds, U.S. inflation protected-securities, and money market funds. The threeTarget-Risk Options keep the same assetallocation among the underlying mutual fundsover the life of your account. The static allocationsamong the mutual funds are set forth in the chartbelow.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
22
Investment options
The three Target-Risk Options you may choosefrom are the Growth, Moderate, and ConservativeInvestment Options. In your selection of anyInvestment Option you should consider, amongother factors, your investment goals andobjectives, and your tolerance for market volatilityand investment risk.
Although the Target-Risk Options keep the sametarget asset allocation over the life of an account,as a result of market gains and losses andearnings, the asset allocation of each of the three
Target-Risk Options may differ over time from thetarget asset allocation described below. Tomaintain the target asset allocation for each of theTarget-Risk Options, the Program Manager willrebalance each of the Target-Risk Optionsperiodically when there is a positive or negativevariance of two percent (2%) or more to retain thetarget asset allocation described below.
You should review each of the Target-RiskOptions before making a selection from amongthe Investment Options offered through the Plan...
....
....
....
....
....
....
....
....
....
....
....
..
A summary of the target asset allocation and mix of underlying mutual funds for each of the Target-Risk Options is described in the following charts:
20%
24%
35%
55%
15%21%
56%
18%
5%
42%
9%
Conservative Investment OptionModerate Investment OptionGrowth Investment Option
Domestic Equity International Equity Fixed Income Cash Equivalent
Growth Investment OptionObjectives – The Growth Investment Optionseeks to provide the potential to grow yourinvestment by investing 80% of its assets indiversified investments of domestic andinternational equity funds (stocks), and 20% infixed income funds (bonds).
Investing in stocks is generally more risky, but hasthe potential for a better return on yourinvestment than investing in bonds. ThisInvestment Option may be appropriate for thosewho will be investing for 10 years or more, wantthe potential to grow their investment, but arewilling to tolerate market fluctuation and risk.
Moderate Investment OptionObjectives – The Moderate Investment Optionseeks to provide a combination of growth andcurrent income by investing 60% of its assets indiversified investments of domestic and
international equity funds (stocks), 35% in fixedincome funds (bonds), and 5% in money marketfunds.
This Investment Option may be appropriate forthose who will be investing for five years or more,want moderate growth, and seek lower risk andfluctuation than the Growth Investment Option.
Conservative Investment OptionObjectives – The Conservative Investment Optionseeks to provide current income and somegrowth by investing 30% of its assets in diversifiedinvestments of domestic and international equityfunds (stocks), 40% in fixed income funds and15% in inflation-protected securities (bonds), and15% in money market funds (cash equivalents).
This Investment Option may be appropriate forthose who will be investing for five years or less,or if your primary investment objective is low riskwith a minimal potential risk for loss...
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
23
Investment options
The detailed asset allocation and mix of underlying investments for each of the Target-Risk Optionsare described in the following table:
TARGET-RISK OPTIONS - ASSET ALLOCATIONS TO UNDERLYING INVESTMENTS
InvestmentOption
VanguardTotalStock
MarketIndex
VanguardInternationalStock Index
VanguardTotal Bond
MarketIndex
VanguardShort-TermBond Index
VanguardShort-TermInflation-ProtectedSecurities
VanguardFederalMoneyMarket
Ticker VSMPX VTIAX VBMPX VBIPX VTSPX VMFXX
Growth 56% 24% 20%
Moderate 42% 18% 30% 5% 5%
Conservative 21% 9% 25% 15% 15% 15%
Underlying mutual funds in the Target-RiskOptionsEach of the underlying investments that comprisethe three Target-Risk Options (as shown above inthe table) is described in detail, along with therisks associated with each underlying investmentin Exhibit B of the Program Disclosure Statement.
Bank Savings Investment OptionThe Bank Savings Investment Option seeksincome consistent with the preservation ofprincipal and invests all of its assets in a savingsaccount held at First National Bank of Omaha.The Savings Account is an omnibus savingsaccount insured by the FDIC and is held in trustby the Trust at the Bank. The Bank also serves asProgram Manager of the Plan.
Investments in the Bank Savings InvestmentOption will earn varying rates of interest. Theinterest rate generally will be equivalent to short-term deposit rates. Interest on the SavingsAccount will be compounded daily based on theactual number of days in a year (typically 365days, except for 366 days in leap years) and willbe credited to the Savings Account on a monthlybasis. The interest on the Savings Account isexpressed as an annual percentage yield (“APY”).The APY on the Savings Account will be reviewedby the Bank on a periodic basis and may berecalculated as needed at any time. To see thecurrent Bank Savings Investment Option APY
please go to www.EnableAL.com. com or call toll-free 866-833-7949.
Checking Investment OptionThe Checking Investment Option seekspreservation of principal and invests all of itsassets in a checking account held at Fifth Third.The Checking Investment Option balances areinsured up to the maximum amount permitted bylaw. The standard insurance amount is $250,000per depositor, for each deposit insuranceownership category. Please visit www.fdic.gov formore information about FDIC insurance coverage.The checking account is opened through andunder the restrictions and oversight of the Plan,and shall be subject to all of the requirements andlimitations set forth in the Program DisclosureStatement, as amended. All assets investedthrough the Checking Investment Option are, andat all times will remain, assets of the Trust untilwithdrawn. Account Owners who invest in theChecking Investment Option are able to writechecks or use a debit card to pay for QualifiedDisability Expenses. Account Owners shouldretain documentation (for example, receipts) of alldistributions for Qualified Disability Expenses fortheir records.
Investments in the Checking Investment Optionwill earn varying rates of interest. Contributionswill not earn interest until the hold period expires(see “Contribution restrictions” on page 16) and
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
24
Investment options
funds are deposited to the account at Fifth Third.The interest rate generally will be equivalent toshort-term deposit rates. Interest will becompounded daily based on the actual numberof days in a year (typically 365 days, except for366 days in leap years) and will be credited to theChecking Investment Option on a monthly basis.The interest on the Checking Investment Optionis expressed as an APY. The APY on the CheckingInvestment Option will be reviewed by Fifth Thirdon a periodic basis and may be recalculated asneeded at any time. To see the current CheckingInvestment Option APY please go towww.EnableAL.com or call toll-free866-833-7949. The Plan will not permit theChecking Investment Option to be established inan Enable Alabama account if the Plandetermines that distributions from such accountare subject to restrictions by court order orotherwise.
Exchanges and transfers into the CheckingInvestment Option require two business days toprocess. These funds will be available forwithdrawal on the second business day.
For fees and expenses see “Fees or Charges forthe Checking Investment Option” on page 31.
For more information go to www.EnableAL.comselect “Checking Investment Option,” and select“Terms and Conditions” or call toll-free866-833-7949.
FDIC insuranceSubject to the application of Bank (for the BankSavings Investment Option), Fifth Third (for theChecking Investment Option) and FDIC rules andregulations to each Account Owner, funds in theBank Savings Investment Option and theChecking Investment Option are insured by FDICinsurance. In contrast, the Target-Risk Options arenot insured by the FDIC.
FDIC insurance is provided for: (1) the BankSavings Investment Option, which invests in anFDIC-insured omnibus savings account held intrust by the Enable Savings Plan and (2) theChecking Investment Option which invests in achecking account within the Trust. Contributions
to and earnings on the investments in the BankSavings Investment Option are insured by theFDIC on a per participant, pass-through basis toeach Account Owner up to the maximum limitestablished by federal law, which currently is$250,000 per depositor. Contributions to andearnings on the investments in the CheckingInvestment Option are insured by the FDIC up tothe maximum limit established by federal law,which currently is $250,000 per depositor.
The amount of FDIC insurance provided to anAccount Owner investing in the Bank SavingsInvestment Option is based on the total of: (1) thevalue of an Account Owner’s investment in theBank Savings Investment Option, and (2) thevalue of all other deposits held by the AccountOwner at Bank, as determined in accordance withBank and FDIC rules and regulations. EachAccount Owner should determine whether theamount of FDIC insurance available to theAccount Owner is sufficient to cover the total ofthe Account Owner’s investment in the BankSavings Investment Option plus the AccountOwner’s other deposits at Bank.
The amount of FDIC insurance provided to anAccount Owner investing in the CheckingInvestment Option is based on the total of: (1) thevalue of an Account Owner’s investment in theChecking Investment Option, and (2) the value ofall other deposits held by the Account Owner atFifth Third, as determined in accordance withFifth Third and FDIC rules and regulations. EachAccount Owner should determine whether theamount of FDIC insurance available to theAccount Owner is sufficient to cover the total ofthe Account Owner’s investment in the CheckingInvestment Option plus the Account Owner’sother deposits at Fifth Third.
For the Bank Savings and Checking InvestmentOptions, the State of Alabama, the State ofNebraska or their officials/employees, theNebraska Investment Council, the Alabama StateTreasurer, the Nebraska State Treasurer, theNebraska State Investment Officer, First NationalBank of Omaha or its authorized agents or theiraffiliates, or any other federal or state entity or
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
25
Investment options
person are not responsible for determining theamount of FDIC insurance provided to anAccount Owner.
No other guaranteesFDIC insurance is the sole insurance available forthe Bank Savings Investment Option and theChecking Investment Option. Furthermore, theBank Savings Investment Option and theChecking Investment Option do not provide aguarantee of any level of performance or return oroffer any additional guarantees. Like all of theInvestment Options, neither the contributions intothe Bank Savings Investment Option, theChecking Investment Option, nor any investmentreturn earned on the contributions is guaranteedby the State of Alabama, the State of Nebraska ortheir officials/employees, the NebraskaInvestment Council, the Alabama State Treasurer,the Nebraska State Treasurer, the Nebraska StateInvestment Officer, First National Bank of Omahaor its authorized agents or their affiliates, or anyother federal or state entity or person.
Risks – To the extent that FDIC insurance applies,the Bank Savings Investment Option and theChecking Investment Option are primarily subjectto the risk that the return on the underlyingSavings Account or underlying Checking Accountwill vary because of changing interest rates andthat the return on the Savings Account and/or theChecking Account will decline because of fallinginterest rates. There is no investment of funds inthese options in an asset that will cause a loss invalue.
It is important to remember that none of the Stateof Alabama, the State of Nebraska or theirofficials/employees, the Nebraska InvestmentCouncil, the Alabama State Treasurer, theNebraska State Treasurer, the Nebraska StateInvestment Officer, First National Bank of Omahaor its authorized agents or their affiliates, or anyother federal or state entity or person canguarantee a minimum rate of return. Except foraccounts invested in the Bank Savings InvestmentOption or the Checking Investment Option, fundsdeposited in an account are not insured by theFDIC. Furthermore, funds deposited in anaccount are not guaranteed or insured by theState of Alabama, the State of Nebraska or itsofficials/employees, the Nebraska InvestmentCouncil, the Alabama State Treasurer, theNebraska State Treasurer, the Nebraska StateInvestment Officer, First National Bank of Omahaor its authorized agents or their affiliates, or anyother federal or state entity or person. The valueof your account may vary depending on marketconditions, the performance of the InvestmentOption you select, timing of purchases, and fees.The value of your account could be more or lessthan the amount you contribute to your account.In short, you could lose money. See “Part 6 –Certain Risks to Consider.”
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
26
PART 5 – PERFORMANCE
Investment Options – Current performanceinformation is available on the Plan’s website atwww.EnableAL.com.
Past performance is no guarantee of future results– Past performance information for InvestmentOptions and the underlying investments are notindicative of the future performance of anyparticular Investment Option. Investment Optionperformance information represents pastperformance and is no guarantee of future results,and will be net of Total Annual Fees and will notreflect the impact of any potential federal or statetaxes.
Investment results of Investment Options will vary– The investment results of any InvestmentOption for any period cannot be expected to besimilar to its investment performance for any priorperiod. In addition, in view of the anticipatedperiodic determinations of such investmentallocations and selection of the underlyinginvestments for each Investment Option, thefuture investment results of any InvestmentOption cannot be expected, for any period, to besimilar to the past performance of any otherInvestment Options or underlying investments.Total returns and the principal value ofinvestments in your account will fluctuate basedon the investment performance of the underlyinginvestments in which the Investment Options havebeen invested, so your investment may be worthmore or less than its original value when youwithdraw your money. Performance may besubstantially affected over time by changes in theallocations and in the underlying investments.
No ownership in underlying investmentsAccount Owners do not directly own shares of theunderlying mutual funds, or, in the case of theBank Savings Investment Option, directly hold asavings account, but rather own interests in theInvestment Options of the Plan. As a result, theperformance of the Investment Options will differfrom the performance of the underlying mutualfunds. This is due in part to the differences in theexpense ratios of the underlying mutual funds andthe Investment Options.
Performance differencesWith the exceptions of the Bank Savings andChecking Investment Options, performancedifferences between an Investment Option and itsunderlying investments may also result fromdifferences in the timing of purchases and fees.On days when contributions are made to anaccount, the Investment Options will not use thatmoney to purchase shares of an underlyinginvestment until the next business day. When youinvest money in an Investment Option, you willreceive units in the Investment Option as of thetrade date. Your money will be used by the Planto purchase shares of an underlying investment.However, the settlement date for the purchase ofshares of an underlying investment typically willbe one to three business days after the trade datefor your purchase of units. Depending on theamount of cash flow into or out of the InvestmentOption and whether the underlying investment isgoing up or down in value, this timing differenceand fees will cause the Investment Option’sperformance either to trail or exceed theunderlying investment’s performance...
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
Performance as of December 31, 2018Investment Option Name Average Annualized Total Returns
Benchmark* 1 year 3 year 5 year Since Inception** Inception Date
Growth Option -6.66% 6.23% 6/30/2016
Enable Benchmark Growth Option -6.22%
Moderate Option -4.91% 4.75% 6/30/2016
Enable Benchmark Moderate Option -4.47%
Conservative Option -2.12% 2.51% 6/30/2016
Enable Benchmark Conservative Option -1.72%
Bank Savings Option 0.70% 0.56% 6/30/2016
Citigroup 3-Month T-Bill 1.86%
Checking Option 0.00% 0.00% 1/26/2017
NA
* Each benchmark is not managed. Therefore, its performance does not reflect management fees, expenses or the imposition of sales charges.** Since Inception Returns for less than one year are not annualized.
27
PART 6 – CERTAIN RISKS TO CONSIDER
Opening an account involves certain risks. Amongother things discussed in this Program DisclosureStatement, you should carefully consider thefollowing risks before completing an EnrollmentForm. You also should read this ProgramDisclosure Statement carefully before making adecision to open an account.
Investment risksEach of the Investment Options is subject tocertain risks that may affect performance. Exceptfor the Bank Savings Investment Option and theChecking Investment Option, an account’s valuemay decline when its Investment Option declinesin value. As with any investment, there can be noassurance that the value of the account will growat any particular rate. The value of the securities inwhich the Investment Options (other than theBank Savings Investment Option and theChecking Investment Option) invest will changedue to market fluctuations and a number of otherfactors, which will not be in the control of theNebraska Investment Council, the Trustee or theProgram Manager. If the value of these securitiesdeclines, you may lose some or all of the principalin the account. None of the State of Alabama, theState of Nebraska or their officials/employees, theNebraska Investment Council, the Alabama StateTreasurer, the Nebraska State Treasurer, theNebraska State Investment Officer, First NationalBank of Omaha or its authorized agents or theiraffiliates, or any other federal or state entity orperson guarantees any minimum rate of return orany return on the account or that you will not losesome or all of the principal amount invested. Fora description of the risks associated with theunderlying investments of each of the InvestmentOptions invests, see “Exhibit B.”
No insurance or guaranteesExcept as described herein for accounts investedin the Bank Savings Investment Option and theChecking Investment Option, the account is notinsured by the FDIC. In addition, the account isnot guaranteed or insured by the State ofAlabama, the State of Nebraska or their officials/employees, the Nebraska Investment Council, theAlabama State Treasurer, the Nebraska StateTreasurer, the Nebraska State Investment Officer,
First National Bank of Omaha or its authorizedagents or their affiliates, or any other federal orstate entity or person.
Program risksSupplemental Security Income – Qualified ABLEprogram balances over $100,000 and certaindistributions from an ABLE program account,such as Enable Alabama, could affect the AccountOwner’s eligibility for SSI.
Medicaid eligibility – The ABLE Act is designed toensure that the value of any and all assetspurchased using funds from an ABLE account thatare Qualified Disability Expenses will not count forpurposes of determining eligibility for Medicaid,and that once an asset is purchased it will not besubject to further review. However, the Centers forMedicare & Medicaid Services (CMS) have not yetprovided interpretative guidance similar to SSA’sregarding the potential impact of ABLE programson Medicaid benefits. Please consult with yourlocal Medicaid office for more information.
State benefits – Qualified ABLE program balancesand distributions from an ABLE program account,such as Enable Alabama, could affect youreligibility for certain state benefits programs.Please consult your local benefits office orbenefits advisor for more information.
No longer an eligible individual – If you are nolonger considered to be an Eligible Individual,expenses incurred at a time when you are not anEligible Individual will not be consideredQualified Disability Expenses. The earningsportion of distributions from the account forexpenses that are not considered QualifiedDisability Expenses will be includable as ordinaryincome for tax purposes and an additional 10%federal tax unless an exception applies.
Medicaid recapture – Upon the death of theAccount Owner, Code Section 529A permits astate to file a claim for the amount of the totalmedical assistance paid for the Account Ownerunder the state’s Medicaid plan after theestablishment of the account (or any ABLEaccount from which amounts were rolled ortransferred to the account). The amount of the
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
28
Certain risks to consider
claim is to be paid only after the payment of alloutstanding payments due for the QualifiedDisability Expenses of the Account Owner and isto be reduced by the amount of all premiumspaid by or on behalf of the Account Owner to aMedicaid Buy-In program under that state’sMedicaid plan. Procedures for filing claims mayvary from state to state. Authorized Individuals,executors, and personal representatives of estatesmay want to consider obtaining advice of counselon the applicability of, and any availableexceptions to, Medicaid recapture underapplicable state law and regulation.
Possible changes to Enable Alabama – TheNebraska State Treasurer, Nebraska InvestmentCouncil and the Program Manager reserve theright to make changes to Enable Alabama at anytime. These changes may include changes to theunderlying investments in which the Plan investsand changes to the expenses the Plan imposes. Ifthe underlying investments are changed, the feesand expenses of the replacement investmentsmay be higher or lower and the replacementinvestments may achieve different performanceresults than the investments the Plan currentlyutilizes.
Limitation on transferring monies from oneInvestment Option to another – An AccountOwner may only move money from oneInvestment Option to another twice per calendaryear.
Funds in the account will be subject to applicablelaw and the terms and conditions of the ProgramDisclosure Statement – These provisions may limityour ability to contribute, withdraw, or transferthese funds. Under no circumstances may anyinterest in an account be sold, exchanged, orused as security or collateral for a loan.
Qualified Disability Expenses may exceed thebalance in the account – Even if you make themaximum amount of contributions to a Planaccount, the balance may not be sufficient tocover the Qualified Disability Expenses incurredby the Account Owner annually or during the lifeof the account.
Plan contributions do not create Alabamaresidency – Contributions to the Plan do notcreate Alabama residency status for the AccountOwner for purposes of determining entitlement toAlabama state benefits.
Laws governing qualified ABLE programs maychange – There is a risk that federal and statelaws and regulations governing Section 529Aqualified ABLE programs could change in thefuture. Proposed U.S. Treasury regulations thathave been issued under Code Section 529Aprovide initial guidance and requirements for theestablishment and operation of the Plan, but donot provide guidance on all aspects of the Plan.Final regulations or other administrative guidanceor court decisions might be issued that couldadversely impact the federal tax consequences orrequirements with respect to the operation of thePlan, including without limitation contributions to,or withdrawals from, the account.
In addition, Code Section 529A or other state orfederal law could be amended in a manner thatmaterially changes (i) your eligibility to open anaccount, (ii) the treatment of the account andcontributions to and withdrawals from the accountfor purposes of eligibility for federal means testedbenefits such as SSI, or (iii) the federal taxtreatment of the account and contributions to andwithdrawals from the account. You shouldunderstand that changes in the law governing thetreatment of accounts in the Plan for purposes offederal means-tested benefits or potential federaland/or state tax consequences described in thisProgram Disclosure Statement may necessitatematerial changes to the Plan. Furthermore, thePlan has been established pursuant to Nebraskastate law, the guidelines and procedures adoptedby the Nebraska State Treasurer, and applicablesecurities laws. Changes to any of those laws orregulations may also affect the operation of thePlan and your eligibility for federal benefits andtax treatment of the Plan described in thisProgram Disclosure Statement.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
29
PART 7 – PLAN FEES AND EXPENSES
Annual account feeThe annual account fee of $45 will be assessed ona quarterly basis in the amount of $11.25 againstthe then-current account balance. In the event theaccount balance in a given quarter is less than$11.25, the available balance will be assessed.The annual account fee will be assessedregardless of which Investment Option(s) anAccount Owner chooses (e.g., a Plan accountinvested entirely in the Checking InvestmentOption will incur a $45 annual account fee).
Program management feeWith the exception of the Checking InvestmentOption, the Program Manager receives amanagement fee equal to 0.50% of the average
daily net assets in each Investment Option. Thisfee accrues daily as a percentage of average dailynet assets and will be deducted from eachInvestment Option. This fee will reduce the valueof an account.
Underlying investment feeThe underlying investments that comprise theGrowth, Moderate and Conservative InvestmentOptions charge a fee, which ranges from .04% to.05% of the average daily net assets in eachunderlying investment. This fee will reduce thevalue of an account. There is no underlying fee onthe Bank Savings Investment Option or theChecking Investment Option.
Annual asset-based feesAnnual asset-based fees are charged by the Plan for each Investment Option to cover the costs tomanage the Plan and to pay the underlying investment manager for their costs.
ANNUAL ASSET-BASED FEES BY INVESTMENT OPTION
Investment Option ProgramManagement Fee1
Estimated UnderlyingMutual Fund Expense2
Total Annual Asset-Based Fees3
Growth 0.50% 0.04% 0.54%
Moderate 0.50% 0.04% 0.54%
Conservative 0.50% 0.05% 0.55%
Bank Savings 0.50% NONE 0.50%
Checking NONE NONE NONE1 Each Investment Option except the Checking Investment Option pays the Program Manager an annualized Program
Management Fee equal to the stated percentage of the average daily net assets held by that Investment Option. TheProgram Management Fee may change at any time. The Program Manager receives this fee for providing programmanagement services for the Plan, including day-to-day administrative and marketing services. The Program Managerprovides funds to the Nebraska State Treasurer to cover costs and expense of operating the Plan. Although no fees arededucted from your account, when you invest in the Plan, you indirectly bear a pro rata portion of the Plan expensesbecause when fees are deducted from Plan assets, the value of the Plan units is reduced.
2 For each Investment Option except the Bank Savings Investment Option and the Checking Investment Option, theEstimated Underlying Mutual Fund Expenses in this column are derived from publicly available information for theunderlying mutual funds as of January 1, 2019 and are based on a weighted average of the expenses of eachunderlying mutual fund’s expense ratio, in accordance with the Investment Options asset allocation among itsunderlying mutual funds. Each Investment Option indirectly bears its pro rata portion of the underlying mutual fundsexpenses because when fees are deducted from an underlying mutual fund’s assets, the value of the underlying mutualfund’s shares is reduced. The actual expenses of the underlying mutual funds may vary.
3 The Total Annual Asset-Based Fees equal the Estimated Underlying Mutual Fund Expenses plus the ProgramManagement Fee rounded to two decimals.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
.
30
Plan fees and expenses
Other account feesThere are no account opening fees associated with the Enable Alabama.
FEES OR CHARGES
Fee or Charge Type Amount
Account opening None
Enrollment None
Cancellation/withdrawal None
Change in Account Owner None
Change in Investment Options None
Annual account $45*
Returned check Up to $25*
Rejected ACH or EFT Up to $25*
Outgoing wire Up to $25*
Overnight delivery $15** charged against the account
Fees or Charges for the Checking Investment Option
OPENING AND USAGEMinimum Deposit Needed to Open $0
Monthly Service Charge $2/month
Requirements to Waive MonthlyService Charge
Meet either of the following:• Enroll in electronic statement delivery. To
enroll in electronic statement delivery for theChecking Investment Option, once youreceive your debit card, visit www.53.com,register your account, and click onDocuments to select your deliverypreferences.
• Maintain an average monthly CheckingInvestment Option balance of at least $250.
In-Network ATM Fees$0 – No Charge to use Fifth Third ATMs orpartner network ATMs, as found on Branch &ATM locator on 53.com
Out of Network ATM Fees1
$2.75 for U.S. transactions$5.00 for each international transactionTransactions include cash withdrawals, transfers,balance inquiries, and purchases made at anATM. Other ATM network owners may alsoassess a usage fee. No charge to use partnernetwork ATMs.
International POS/ATM Transaction Fee1 3% of transaction amount
Currency Conversion Fee1 0.20% of transaction amount
31
Plan fees and expenses
Fees or Charges for the Checking Investment Option (Cont.)
OVERDRAFT FEES AND RETURNED PAYMENTS
Overdraft Fee $0
Returned Item Fee Per Item $0
OTHER SERVICE FEES
ATM Mini Statement1 $0
Copy of a Check or Statement Per Request1 $5 per copy(Visit 53.com for up to 24 months of statementhistory, including checks when applicable,available at no charge.)
Copy Of Check Images MailedWith Monthly Statement1
$2 per month
Stop Payment Fee1 $33 per item
Debit MasterCard® $0 (No Annual Fee)
Debit Card Replacement Fee $0
Use of Non Fifth Third Cash AdvanceTerminal Debit Card Fee1
Greater of $5 or 3% of the transaction amount upto a maximum of $10
1Fees are subject to change.
There is a $6 fee to order a checkbook with 50 checks. The fee will be deducted from the CheckingInvestment Option. A balance of $25 must be in your Checking Investment Option before the firstcheckbook can be ordered.
For additional information about optional services performed or requested by the Account Owner fora fee or charge, go to www.EnableAL.com, select “Checking Investment Option,” and select “Termsand Conditions” or call toll-free 866-833-7949.
32
Plan fees and expenses
Approximate cost of annual asset-based fees for a $10,000 investmentThe following table compares the approximate cost of investing in the Plan over different periods oftime. This hypothetical is not intended to predict or project investment performance. Pastperformance is no guarantee of future performance. Your actual cost may be higher or lower. Thetables are based on the following assumptions:
• A $10,000 contribution is invested for the time periods shown;
• A 5% annually compounded rate of return on the amount invested throughout the period;
• The account is redeemed at the end of the period shown to pay for Qualified Disability Expenses(the table does not consider the impact of any potential state or federal taxes on theredemption); and
• The Total Estimated Annual Asset-Based fee remains the same as that shown in the AnnualAsset-Based Fee Table and no other account fees are imposed (see “Other account fees” tableabove).
APPROXIMATE COST OF A $10,000 INVESTMENT
Investment Option 1 Year 3 Years 5 Years 10 Years
Growth $55 $173 $302 $677
Moderate $55 $173 $302 $677
Conservative $56 $176 $307 $689
Bank Savings $50 $160 $280 $628
Checking N/A N/A N/A N/A
33
PART 8 – DISTRIBUTIONS FROM AN ACCOUNT
Requesting a distribution from an accountTo request a distribution, the Account Owner can:(1) complete and submit a withdrawal form to theProgram Manager by mail, (2) initiate a withdrawalonline by logging into his or her account atwww.EnableAL.com, or (3) call the Plan toll-free at866-833-7949. If you invest in the CheckingInvestment Option, you can also make adistribution from the Checking Account usingyour check or debit card.
Your account must maintain or have a minimumbalance of $50.
You can also request a Rollover out of EnableAlabama by submitting a form downloaded fromthe Plan’s website. See “Part 10 – Federal andState Tax Considerations” for more informationon Rollovers.
The Program Manager employs procedures itconsiders to be reasonable to confirm thatinstructions communicated by telephone orInternet are genuine, including requiring certainpersonal identifying information prior to actingupon telephone or Internet instructions. None ofthe Program Manager, its authorized agents, theTrust, or the Trustee will be liable for followingtelephone or Internet instructions that arereasonably believed to be genuine.
With the exception of distributions using checks ora debit card from the Checking Investment Option,the Program Manager will review each withdrawalrequest to determine that all information needed toprocess such request has been received.Withdrawal requests will be processed as soon aspracticable following the Program Manager’sreceipt and review of a properly completed form.The Plan typically will process a withdrawal formsent by mail and will initiate payment of adistribution within two business days of receipt ofthe request. During periods of market volatility andat year-end, withdrawal requests may take up tofive business days to process. Please plan to submityour withdrawal requests in advance to take intoaccount the necessary processing time. See also“Temporary withdrawal restrictions” belowregarding withdrawals of recent contributions to anaccount.
Although the Program Manager is required toreport the earnings portion of any withdrawal totax authorities, it is solely the Account Owner’sresponsibility to calculate and report any resultingtax liability.
See “Part 10 – Federal and State TaxConsiderations” for more information on thepotential tax consequences of withdrawals from aPlan account.
Temporary withdrawal restrictionsIf you made a contribution that was in goodorder, you will not be able to make a withdrawalof that contribution from the account for fivebusiness days after contribution, except forcontributions into the Checking InvestmentOption for which you will not be able to make awithdrawal of that contribution for six businessdays after deposit. Following a change in addressor Account Owner, there is a 10-business-dayhold before a withdrawal requested directly fromthe Plan can be made. A withdrawal request mustbe signature guaranteed if the request is within10 business days of the change to have thewithdrawal released before the hold periodexpires. Following the addition or change of bankinformation, there is a 15-calendar-day hold onACH withdrawals requested directly from thePlan.
Systematic Withdrawal ProgramThe Plan permits Account Owners to takeadvantage of a Systematic Withdrawal Program(“SWP”). Under the SWP, you are able to chooseto establish periodic, pre-scheduled withdrawalsfor Qualified Disability Expenses from your EnableAlabama account. The Plan will file IRSForm 1099-QA annually for distributions taken forall withdrawals, including those using systematicwithdrawals. You can have up to two SWPs on theaccount. If the balance in your Investment Optionis less than the SWP amount specified, the SWPinstructions will be stopped. A SWP distributionwill be held for up to five business days forcontributions that have not yet cleared, except forcontributions into the Checking InvestmentOption for which you will not be able to make awithdrawal of that contribution for six business
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
34
Distributions from an account
days or 10 business days if the Account Owner oraddress has been changed on the account andthe SWP is within 10 business days of thatchange. The distribution will be released whenthe specified waiting period has been satisfied.
Qualified WithdrawalsQualified Withdrawals from the account are freefrom federal and state income tax. A QualifiedWithdrawal is a withdrawal used to pay QualifiedDisability Expenses of the Account Owner.
Distribution of a Qualified WithdrawalA Qualified Withdrawal will be distributed to theAccount Owner. If there is an AuthorizedIndividual on the account, a Qualified Withdrawalwill be payable to the Account Owner.Distributions will be sent to the address on theaccount or a third party designated by theAccount Owner.
Because money in the account may be withdrawnfree from federal income tax only if it is used topay the Account Owner’s Qualified DisabilityExpenses, you should retain documentation of allof the Account Owner’s Qualified DisabilityExpenses for your records.
Non-Qualified WithdrawalsNon-Qualified Withdrawals are subject to federaland state tax. See “Part 10 – Federal and StateTax Considerations” for more information abouthow the earnings portion of a Non-QualifiedWithdrawal is calculated and the other taxconsequences of a Non-Qualified Withdrawal,and the application of the 10% additional federaltax on certain non-qualified withdrawals.
RolloversYou may direct a Rollover from a Plan account toan account in another qualified ABLE program forthe same or another Account Owner who is aMember of the Family. Alternatively, you maymake a withdrawal from your account andre-deposit the withdrawn balance within 60 daysinto an account in another qualified ABLE programfor the same or another Account Owner. See“Part 10 – Federal and State Tax Considerations”for more information on Rollovers.
Taxpayer’s ResponsibilityThe Account Owner or Authorized Individual, notthe Plan nor the Program Manager, is solelyresponsible for determining if a withdrawal is aQualified Withdrawal or a Non-QualifiedWithdrawal and for the applicable federal andstate tax consequences.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
35
PART 9 – SUPPLEMENTAL SECURITY INCOME GUIDANCE
Supplemental Security IncomeThe Social Security Administration (“SSA”) hasissued guidance on how SSA will treat ABLEaccounts for purposes of determining AccountOwners’ benefit eligibility under SSI. Thisguidance is derived from publicly availablesources and is not intended to be exhaustive, andis subject to change by the SSA at any time.
Exclusions from income
SSA will exclude:
• Up to and including $100,000 of the balanceof funds in a Plan account from the resourcesof the Account Owner;
• Contributions to a Plan account from theincome of the Account Owner. This includesRollovers from a family member’s Planaccount to an SSI recipient’s Plan account.Account Owners and their AuthorizedIndividuals should note that the fact that aperson uses his or her income to contributeto a Plan account does not mean that incomeis not countable for SSI purposes;
• Any earnings a Plan account receives fromthe income of the Account Owner; and
• Distributions from the Plan account as incomeof the Account Owner.
Exclusions from countable resources
SSA will exclude from an Account Owner’scountable resources a distribution for a QualifiedDisability Expense other than housing if it isretained beyond the month received. Thisexclusion applies for as long as:
• the Account Owner maintains, makescontributions to, or receives distributionsfrom the ABLE account;
• the distribution is unspent; and
• the distribution is identifiable.
Example: Eric takes a distribution of $500 from hisABLE account in June to pay for a health-relatedQualified Disability Expense. His health-relatedexpense is not due until September, so Ericdeposits the distribution into his personalchecking account in June. The distribution is notincome in June. Eric maintains his ABLE accountat all relevant times, and the distribution is bothunspent and identifiable until Eric pays his health-related expense in September. SSA will excludethe $500 from Eric’s countable resources in July,August, and September.
Housing related Qualified Disability Expenses andNon-Qualified Disability Expenses not excluded
SSA will count as a resource a distribution for ahousing-related Qualified Disability Expense orfor an expense that is not a Qualified DisabilityExpenses if the distribution is retained into themonth following the month of receipt. If thedistribution is spent within the month of receipt ithas no effect on eligibility.
Example: Amy takes a distribution of $500 fromher ABLE account in May to pay her rent for June.She deposits the $500 into her personal checkingaccount in May, and withdraws $500 in cash onJune 3rd and pays her landlord. This distributionis a housing-related Qualified Disability Expenseand part of her checking account balance as ofthe first of June, which makes it a countableresource by SSA for the month of June.
ABLE account balances over $100,000 notexcluded
SSA will count the amount by which an ABLEaccount balance exceeds $100,000 as acountable resource of the Account Owner.
Suspension of SSI where balance of ABLE accountexceeds $100,000 by certain amount
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
36
Supplemental security income guidance
A special rule applies when the balance of an SSIrecipient’s ABLE account exceeds $100,000 by anamount that causes the recipient to exceed theSSI resource limit—whether alone or incombination with other resources. When thishappens, the recipient is put into a special SSIsuspension period where:
• SSA suspends the recipient’s SSI benefitswithout time limit (as long as he or sheremains otherwise eligible);
• the recipient retains continued eligibility formedical assistance (Medicaid); and
• the individual’s eligibility does not terminateafter 12 continuous months of suspension.
SSA will reinstate the recipient’s regular SSIeligibility for any month in which the individual’sABLE account balance no longer causes therecipient to exceed the resource limit and he orshe is otherwise eligible. As of the date of thisProgram Disclosure Statement, the SSA is workingon additional procedures related to this specialsuspension status.
Code Section 529A requires the Plan to providethe SSA with reporting on Plan accounts. Basedon guidance from the SSA, it is anticipated thatthe Plan will be required to provide monthlyelectronic reports to the SSA including, withoutlimitation, the following information for eachaccount: the name of the Account Owner; SocialSecurity or taxpayer identification number of theAccount Owner; date of birth of the AccountOwner; name of the person who has signatureauthority (if different from the Account Owner);unique account number assigned to the account;account opened date; account closed date;balance as of the first moment of the month (thatis, the balance as of 12:00 a.m. local time on thefirst of the month); date of each distribution in thereporting period; and amount of each distributionin the reporting period.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
37
PART 10 – FEDERAL AND STATE TAX CONSIDERATIONS
Any information contained in this ProgramDisclosure Statement is not intended or written tobe used, and cannot be used, by a person as taxadvice for the purpose of avoiding any penaltiesthat may be imposed under the Code. In addition,the information contained in this ProgramDisclosure Statement was written to support thepromotion or marketing of the transaction(s) ormatter(s) addressed in this Program DisclosureStatement. Each taxpayer should seek advicebased on the taxpayer’s particular circumstancesfrom an independent tax advisor.
The following discussion summarizes certainaspects of federal and state income, gift, estateand generation-skipping transfer (“GST”) taxconsequences relating to Enable Alabama andcontributions to, earnings of, and withdrawalsfrom the accounts. The summary is not exhaustiveand is not intended as individual tax advice. Inaddition, there can be no assurance that the IRS,Alabama Department of Revenue or NebraskaDepartment of Revenue will accept thestatements made herein or, if challenged, thatsuch statements would be sustained in court. Theapplicable tax rules are complex, certain rules areat present uncertain, and their application to anyparticular person may vary according to facts andcircumstances specific to that person. The Codeand regulations thereunder, and judicial andadministrative interpretations thereof, are subjectto change, retroactively and/or prospectively. Aqualified tax advisor should be consultedregarding the application of law in individualcircumstances.
This summary is based on the relevant provisionsof the Code, state tax law and proposed U.S.Treasury regulations. It is possible that Congress,the U.S. Treasury, the IRS, the State of Nebraska,the State of Alabama and other taxingauthorities or the courts may take actions thatwill adversely affect the tax law consequencesdescribed and that such adverse effects may beretroactive. No final tax regulations or rulingsconcerning Enable Alabama have been issued bythe IRS or the State of Alabama, and whenissued, such regulations or rulings may alter the
tax consequences summarized herein or, ifpossible, necessitate changes in the Plan toachieve the tax benefits described. The summarydoes not address the potential effects on AccountOwners of the tax laws of any state other thanAlabama.
Code Section 529A or other federal law could beamended in a manner that would materiallychange or eliminate the federal tax treatmentdescribed herein. The Program Manager andTrustee intend to modify Enable Alabama withinthe constraints of applicable law for the Plan tomeet the requirements of Code Section 529A.
Lack of certaintyAs of the date of this Program DisclosureStatement, proposed U.S. Treasury regulationshave been issued under Code Section 529A uponwhich taxpayers may rely at least until finalregulations are issued. The proposed regulationsdo not, however, provide guidance on variousaspects of Enable Alabama. It is uncertain whenfinal regulations will be issued. Therefore, therecan be no assurance that the federal taxconsequences described herein for AccountOwners are applicable.
Federal tax considerationsQualified ABLE Program – The Plan is designed tobe a qualified ABLE program under CodeSection 529A.
Eligible Individual – In order to open an accountand to receive the tax benefits afforded anAccount Owner you must be an EligibleIndividual. If the Account Owner ceases to be anEligible Individual, beginning on the first day ofthe Account Owner’s first taxable year for whichthe Account Owner does not satisfy the definitionof an Eligible Individual, additional contributionsto the Account Owner’s account will not beaccepted by the Plan. Additionally, during thetime the Account Owner is not an EligibleIndividual, none of the Account Owner’s expenseswill be considered Qualified Disability Expenses.If the Account Owner subsequently re-qualifies asan Eligible Individual, contributions to theAccount Owner’s account again may be accepted
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
38
Federal and state tax considerations
subject to the applicable Annual ContributionLimit and the Account Balance Limit, andexpenses incurred that meet the definition of aQualified Disability Expense will be QualifiedDisability Expenses. The Account Owner orAuthorized Individual is responsible for makingthe required certifications relating to the AccountOwner’s eligibility to invest and reporting to thePlan when the Account Owner is no longereligible. See “Part 1 – Overview” for moreinformation.
One account rule – The proposed U.S. Treasuryregulations provide that except with respect toRollovers, no Account Owner may have more thanone ABLE account in existence at the same time.A prior ABLE account that has been closed doesnot prohibit the subsequent creation of anotherABLE account for the same Account Owner. Theproposed U.S. Treasury regulations provide that,in the event any ABLE account is opened for anAccount Owner with an ABLE account already inexistence, only the first such account created forthat Account Owner qualifies as an ABLE account.
If more than one ABLE account is opened by anAccount Owner, the subsequent ABLE account(s)will not be treated as ABLE accounts under theABLE Act and will not be eligible for the benefitsof ABLE accounts. For example, moniescontributed to a second or subsequent ABLEaccount will not be disregarded for determiningeligibility under federal means-tested programs,such as SSI, and could result in the imposition offederal taxes and penalties.
The proposed U.S. Treasury regulations alsoprovide, however, that a return, in accordancewith the rules that apply to returns of ExcessContributions of the entire balance of a second orother subsequent account received by thecontributor(s) on or before the due date (includingextensions) for filing the Account Owner’s incometax return for the year in which the account wasopened and contributions to the second orsubsequent account were made will not betreated as a gift or distribution to the AccountOwner for purposes of Code Section 529A. If theExcess Contributions are returned within the time
periods specified above, any net incomedistributed is includible in the gross income of thecontributor(s) in the taxable year in which theExcess Contribution was made.
Federal tax advantages – Contributions to aqualified ABLE program are not deductible forfederal income tax purposes. There aretwo primary federal income tax advantages toinvesting in a qualified ABLE program.
First, investment earnings on the money youinvest in the Plan will not be subject to federalincome tax until they are distributed. Second, theinvestment earnings distributed as part of aQualified Withdrawal, are free from federalincome tax.
Withdrawals – The treatment of a withdrawal froman account will vary depending on whether thewithdrawal is a Qualified Withdrawal, Rollover, ora Non-Qualified Withdrawal. Whether awithdrawal is a Qualified Withdrawal, Rollover, ora Non-Qualified Withdrawal is a matter betweenthe Account Owner and the IRS. The Planassumes no responsibility for monitoring theAccount Owner’s compliance with applicable taxrules.
Qualified Withdrawals – If a Qualified Withdrawalis made from an account, no portion of thedistribution is includable in the gross income ofthe Account Owner. A Qualified Withdrawal is awithdrawal that is solely used to pay the AccountOwner’s Qualified Disability Expenses.
Qualified Disability Expenses – QualifiedDisability Expenses include any expenses incurredat a time when the Account Owner is an EligibleIndividual that relate to the blindness or disabilityof the Account Owner, and are for the benefit ofthe Account Owner in maintaining or improvinghis or her health, independence, or quality of life.Such expenses include, but are not limited to,expenses for education, housing, transportation,employment training and support, assistivetechnology and personal support services, health,prevention and wellness, financial managementand administrative services, legal fees, expensesfor oversight and monitoring, funeral and burial
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
39
Federal and state tax considerations
expenses, and other expenses that may beidentified from time to time in future guidancepublished by the IRS.
In order to implement the legislative purpose ofassisting Eligible Individuals in maintaining orimproving their health, independence, and qualityof life, the U.S. Treasury and the IRS take theposition that the term “Qualified DisabilityExpenses” should be broadly construed to permitthe inclusion of basic living expenses and shouldnot be limited to expenses for items for whichthere is a medical necessity or which provide nobenefits to others in addition to the benefit to theEligible Individual. For example, expenses forcommon items such as smart phones could beconsidered Qualified Disability Expenses if theyare an effective and safe communication ornavigation aid for a child with autism.
Rollovers – A qualified Rollover is a transfer offunds by any of the following methods (see“Alabama state income tax considerations” onpage 42 for more information on Rollovers):
• Direct Rollovers. A direct Rollover (referred toas a ”program-to-program transfer” in theproposed U.S. Treasury regulations) means thedirect transfer of the entire balance of an ABLEaccount into an ABLE account of the sameAccount Owner in which the transferor ABLEaccount is closed upon completion of thetransfer, or of part or all of the balance to anABLE account of another Eligible Individualwho is a Member of the Family of the formerAccount Owner, without any interveningdistribution or deemed distribution to theAccount Owner. Direct rollovers may occurinto the Plan as contributions or out of the Planas withdrawals. Direct Rollovers also include adirect transfer from a qualified tuition programaccount into an ABLE account owned by thedesignated beneficiary of the qualified tuitionprogram account, or a Member of the Familyof such designated beneficiary. Rollovers froma qualified tuition program that exceed theAnnual Contribution Limit are includible in thedistributee’s gross income.
• Indirect Rollovers into the Plan. An indirectRollover into the Plan is a withdrawal of fundsfrom your account in another qualified ABLEprogram, followed within 60 days of thatwithdrawal by a contribution of those fundsto your account in the Plan (provided youhave not made a similar transfer to youraccount in the Plan or any account in anotherqualified ABLE program within the previous12 months) or to a person who is an EligibleIndividual and a Member of the Family of theAccount Owner. To initiate a rollover fromanother qualified ABLE program to the Planyou must first open a Plan account. IndirectRollovers also include a withdrawal of fundsfrom a qualified tuition program account,followed within 60 days of that withdrawal bya contribution of those funds into an ABLEaccount owned by the designated beneficiaryof the qualified tuition program account, or aMember of the Family of such designatedbeneficiary. Rollovers from a qualified tuitionprogram that exceed the Annual ContributionLimit are includible in the distibutee’s grossincome.
• Indirect Rollovers out of the Plan. An IndirectRollover out of the Plan is a withdrawal offunds from your account, followed within60 days of that withdrawal by a contribution ofthose funds to an account in another qualifiedABLE program for you as Account Owner(provided you have not made a similar transferto any qualified ABLE program within theprevious 12 months) or to a person who is anEligible Individual and a Member of the Family.
Member of the Family – means an individual whois related to the Account Owner in any of thefollowing ways:
• A son or daughter, or a descendant of either;• A stepson or stepdaughter;• A brother, sister, stepbrother or stepsister;• A stepfather or stepmother;• A son or daughter of a brother or sister;• A brother or sister of the father or mother;• A son-in-law, daughter-in-law, father-in-law,
mother-in-law, brother-in-law or sister-in-law;
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
40
Federal and state tax considerations
• The spouse of the Account Owner or thespouse of any of the foregoing individuals; or
• A first cousin of the Account Owner.
For purposes of determining who is a Member ofthe Family, a legally adopted child or foster childof an individual is treated as the child of suchindividual by blood. The terms brother and sisterinclude a brother or sister by the half-blood.
Application of tax rules – A Rollover is generallynot includible in the gross income of the AccountOwner. A transfer of funds that does not meet theconditions stated above for Rollovers willconstitute a Non-Qualified Withdrawal subject tofederal tax and a 10% penalty. Both the federalincome tax and the 10% penalty tax are onearnings. In addition, a transfer to a person who isnot a Member of the Family will subject theAccount Owner to federal gift and GST tax.
NOTE: In the case of a Rollover from anotherqualified ABLE plan, the ABLE account fromwhich amounts were rolled must be closed as ofthe 60th day after the amount was distributedfrom the ABLE account in order for the accountthat received the Rollover to be treated as anABLE account. If the account that receives thetransfer is not treated as an ABLE account, theaccount will not be eligible for the benefits ofABLE accounts. For example, the account will notbe disregarded for determining eligibility underfederal means-tested programs, such as SSI, andcould result in the imposition of federal taxes andpenalties.
The Program Manager will treat the entireamount of any contribution that is a Rollovercontribution from another qualified ABLEprogram or qualified tuition program asearnings in the account receiving thecontribution unless the Program Managerreceives appropriate documentation showingthe actual earnings portion of the contribution.
Non-Qualified Withdrawal (taxable withdrawals) –There are also potential federal income taxdisadvantages to an investment in a qualifiedABLE program. A Non-Qualified Withdrawal is adistribution from an account that is not a
Qualified Withdrawal or Rollover. To the extentthat a distribution from an account is aNon-Qualified Withdrawal, the portion of theNon-Qualified Withdrawal attributable toinvestment earnings on the account will beordinary income to the recipient of the withdrawalfor the year in which the withdrawal is made. Nopart of the earnings portion will be treated ascapital gain. Under current law, the federal taxrates on ordinary income are generally greaterthan the tax rates on capital gain. Thecontribution portion of a withdrawal is notincludable in federal gross income.
Additionally, to the extent that a distribution is aNon-Qualified Withdrawal, the federal income taxliability of the recipient will be increased by anamount equal to 10% of any earnings portion ofthe withdrawal distribution subject to certainexceptions set forth below.
Exceptions to penalty tax – The additional 10%federal tax does not apply to:
• Distributions on or after the death of theAccount Owner paid to the estate of anAccount Owner or to an heir or legatee of theAccount Owner.
• Returns of Excess Contributions andcontributions to additional purported ABLEaccounts made by the due date (includingextensions) of the Account Owner’s tax returnfor the year in which the relevantcontributions were made.
• Distributions made after the death of theAccount Owner in payment of outstandingobligations due for Qualified DisabilityExpenses of the Account Owner are notincludible in the gross income of the AccountOwner or his or her estate, including thepost-death payment of any part of a claimfiled against the Account Owner or theaccount by a state under a state Medicaidplan.
You should consult your own tax advisorregarding the application of any of the aboveexceptions.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
41
Federal and state tax considerations
Rollovers – No portion of a Rollover from onequalified ABLE program to another qualifiedABLE program is includable in the gross incomeof the Account Owner or subject to the additional10% federal tax. Rollovers from a qualified tuitionprogram count toward the Annual ContributionLimit and any amount rolled over in excess of thatlimit is includible in the distributee’s grossincome. See “Alabama state income taxconsiderations” on page 42 for more information.
Change of Account Owner – A change in theAccount Owner of an account is not treated as adistribution if the new Account Owner is anEligible Individual and a Member of the Family ofthe former Account Owner. However, if the newAccount Owner is not an Eligible Individual and aMember of the Family of the former AccountOwner, the change is treated as a Non-QualifiedWithdrawal by the former Account Owner. Achange in the Account Owner of an account or atransfer to an account for the new Account Ownermay have federal gift tax or GST taxconsequences.
Earnings – If there are earnings in an account,each distribution from an account consists of twoparts. One part is a return of the contributions inthe account. The other part is a distribution ofearnings in the account. If distributions from youraccount do not exceed your Qualified DisabilityExpenses for that year, no amount is includible inyour gross income. For any year in which there isa withdrawal from an account, the ProgramManager will provide an IRS Form 1099-QA. Thisform will set forth the total amount of thewithdrawal and identify the earnings andcontribution portions of any withdrawal.
Gift tax and GST tax – For federal gift and GSTtax purposes, contributions to an account by theAccount Owner are not considered to becompleted gifts because an individual cannotmake a transfer of property to himself or herself,and a transfer of property is a fundamentalrequirement for a completed gift. However,contributions to the account by persons otherthan the Account Owner are considered acompleted gift from the contributor to the
Account Owner and are eligible for the annual gifttax exclusion. Contributions that qualify for thegift tax annual exclusion are generally alsoexcludible for purposes of the federal GST tax. Adonor’s total contributions to an account for theAccount Owner in any given year (together withany other gifts made by the donor to the AccountOwner in the year) will not be considered taxablegifts and will generally be excludible for purposesof the GST tax if the gifts do not in total exceedthe annual exclusion for the year. Currently, theannual exclusion is $15,000 per donee. Thismeans that in each calendar year you maycontribute up to $15,000 to an Account Owner’saccount without the contribution beingconsidered a taxable gift provided you make noother gifts to the Account Owner in the sameyear. The annual exclusion is indexed for inflationand therefore is expected to increase over time.
Change of Account Owner – Neither federal gifttax nor the federal GST tax applies to a change ofAccount Owner if the new Account Owner is bothan Eligible Individual and a Member of the Familyof the Account Owner. The previous sentencedoes not apply to any other change of AccountOwner.
Estate tax – Proposed U.S. Treasury regulationsprovide that, upon the death of the AccountOwner, all amounts remaining in the ABLEaccount are includible in the Account Owner’sgross estate for purposes of the estate tax.
Alabama state income tax considerationsContributions to Enable Alabama are notdeductible for Alabama state income taxpurposes.
Alabama state income tax – The earnings creditedto an account in Enable Alabama will not beincludable in computing the Alabama taxableincome of the Account Owner so long as theearnings remain in the account. Also, there are noAlabama state income taxes due on investmentearnings in an account in Enable Alabama whenused to pay for Qualified Disability Expenses.
However, there are Alabama state income taxesdue on investment earnings paid out as a part ofNon-Qualified Withdrawals...
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
42
Federal and state tax considerations
The Account Owner will not be required toinclude any amount in computing Alabamataxable income as a result of a transfer ofamounts from an Account Owner to the accountof a different qualifying Account Owner, providedthat in each case the new Account Owner is anEligible Individual and a Member of the Family ofthe replaced Account Owner and the transfersoccur either directly or by deposit to the newaccount in Enable Alabama (or other ABLEProgram sponsored or participated in by theState of Alabama) within 60 days of thewithdrawal from the prior account.
However, an Account Owner will be required toinclude in computing Alabama taxable incomeany amounts resulting from a qualified rollover ortransfer from Enable Alabama to another ABLEplan when such other ABLE plan to which therollover or transfer is made is not sponsored orparticipated in by the State of Alabama.
To the extent that amounts refunded under theEnable Alabama to an Account Owner qualifyunder Code Section 529A as not subject to tax,such refunded amounts are also not subject to taxin the State of Alabama.
Income tax considerations for residents andtaxpayers of other statesCheck with any state in which you pay incometaxes to determine applicable tax considerations.
Tax reportsThe Plan will report contributions, withdrawals,the basis of the Account Owner’s eligibility,earnings in the account, and other matters to theIRS, a state, and other persons, if any, to theextent required by federal, state, or local law,regulation or ruling. By January 31 of thefollowing year, the Account Owner will be sent acopy of the report or a corresponding statementfiled with the IRS.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
43
PART 11 – OTHER CONSIDERATIONS
BankruptcyFederal law expressly excludes certain funds froman individual debtor’s bankruptcy estate (whichfunds, therefore, will not be available fordistribution to such individual’s creditors), if thefunds were contributed by the debtor to a Planaccount. The bankruptcy protection for CodeSection 529A accounts, however, is limited.
The funds contributed to a Plan account will beprotected if the Account Owner is the individualdebtor’s child, stepchild, grandchild, or stepgrandchild for the taxable year in which the fundswere placed in the account, and only to theextent that such funds are not (i) pledged orpromised to any entity in connection with anyextension of credit; or (ii) Excess Contributions.The following limits also apply:
• Contributions made to an Account Owner’sPlan account more than 720 days before afederal bankruptcy filing are completelyprotected;
• Contributions made to an Account Owner’sPlan account during the period beginning365 days through 720 days before a federalbankruptcy filing are protected up to $6,225;and
• Contributions made to an Account Owner’sPlan account less than 365 days before afederal bankruptcy filing are not protectedagainst creditor claims in federal bankruptcyproceedings.
Your own state law may offer additional creditorprotections. You should consult your legal advisorregarding the effect of any bankruptcy filing onthe account.
Creditor protectionThe legislation establishing the Trust isinterpreted in accordance with Nebraska statelaw.
As of the date of this Program DisclosureStatement, courts have yet to interpret, apply orrule on matters involving an interpretation of theNebraska legislation. None of the State ofAlabama, the State of Nebraska or their officials/employees, the Nebraska Investment Council, theAlabama State Treasurer, the Nebraska StateTreasurer, the Nebraska State Investment Officer,the Program Manager, or the Distributor makesany representations or warranties regardingprotection from creditors. You should consult yourlegal advisor regarding this law and yourcircumstances.
AuditsNebraska state law requires the Trust to beaudited by a certified public accountant or theNebraska State Auditor. The Trust’s auditedfinancial statements may be viewed ordownloaded at www.treasurer.nebraska.gov. TheTrustee will engage a certified auditing firm toperform the annual audit.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
44
PART 12 – GLOSSARY
Account Owner means the Eligible Individual forwhose benefit all contributions to the account aremade and who is the owner of the account.
Account Balance Limit means the limit on totalcontributions to the account mandated by CodeSection 529A. The Account Balance Limit iscurrently $400,000. No additional contributionsmay be made for the benefit of an AccountOwner when the fair market value of his or heraccount exceeds $400,000. If, however, themarket value of such accounts falls below theAccount Balance Limit, additional contributionswill be accepted.
Annual Contribution Limit means the limit onannual contributions to a Plan account. The Plan’sAnnual Contribution Limit is currently $15,000 perAccount Owner from all sources. Once the AnnualContribution Limit is reached, contributions madeby an employed Account Owner may exceed theAnnual Contribution Limit by the lesser of (a) thecompensation included in the Account Owner’sgross income for the taxable year, or (b) thefederal poverty line for a one-person householdas determined for the calendar year precedingthe calendar year in which the taxable yearbegins.
Authorized Individual means a person who mayact on the Account Owner’s behalf with respect tothe account if the Account Owner is unable toexercise signature authority over his or heraccount or chooses to establish an account, butnot exercise signature authority. The AuthorizedIndividual may be a person granted a valid powerof attorney to invest monies on the AccountOwner’s behalf and to take all necessary actionson behalf of the Account Owner with respect tothe account or, if none, the Eligible Individual’sparent or legal guardian.
Eligible Individual for a taxable year means thatduring that year the individual (1) is entitled tobenefits based on blindness or disability underTitle II or XVI of the Social Security Act, or(2) makes a disability certification under penaltiesof perjury to the Program Manager that meets thePlan’s requirements.
Member of the Family means an individual whois related to the Account Owner in any of thefollowing ways:
• A son or daughter, or a descendant of either;• A stepson or stepdaughter;• A brother, sister, stepbrother or stepsister;• A stepfather or stepmother;• A son or daughter of a brother or sister;• A brother or sister of the father or mother;• A son-in-law, daughter-in-law, father-in-law,
mother-in-law, brother-in-law or sister-in-law;• The spouse of the Account Owner or the
spouse of any of the foregoing individuals; or• A first cousin of the Account Owner.
For purposes of determining who is a Member ofthe Family, a legally adopted child or foster childof an individual is treated as the child of suchindividual by blood. The terms brother and sisterinclude a brother or sister by the half-blood.
Qualified Disability Expenses means expensesincurred that relate to the blindness or disabilityof the Account Owner and are for the benefit ofthe Account Owner in maintaining or improvinghis or her health, independence, or quality of life.Such expenses include, but are not limited to,expenses related to the Account Owner’seducation, housing, transportation, employmenttraining and support, assistive technology andrelated services, personal support services,health, prevention and wellness, financialmanagement and administrative services, legalfees, expenses for oversight and monitoring, andfuneral and burial expenses, as well as otherexpenses that may be identified from time to timein future IRS guidance.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
45
EXHIBIT A – PARTICIPATION AGREEMENT
Enable Alabama is offered by the State ofAlabama. The State of Alabama, through theABLE Board, contracted with the Nebraska StateTreasurer to participate in and create EnableSavings Plan Alabama (“Enable Alabama” or“Plan”) as part of the Trust.
Pursuant to the terms and conditions of thisParticipation Agreement for Enable Alabama, theAccount Owner (or Authorized Individual), bycompleting and signing an Enrollment Form,hereby requests The Nebraska Achieving a BetterLife Experience Program Trust (the “Trust”) toopen an account for the benefit of the AccountOwner listed on the Enrollment Form and agreesto the terms and conditions of this ProgramDisclosure Statement and ParticipationAgreement.
The Account Owner (“you”), the Trust, whichholds the assets for Enable Alabama, theNebraska State Treasurer (“Trustee”) and FirstNational Bank of Omaha, as the ProgramManager (“Program Manager”) and itsauthorized agents agree as follows:
Section 1. Accounts.
(a) Opening account. The purpose of thisParticipation Agreement is to establish an accountfor the Qualified Disability Expenses of theAccount Owner named in the Enrollment Form.
(b) Separate accounts. The Trust will maintain aseparate account for each Account Owner. Eachaccount is governed by a ParticipationAgreement. All assets held in the account areheld for the exclusive benefit of the AccountOwner as provided by applicable law.
(c) Naming and changing the Account Owner.You will name the Account Owner in theEnrollment Form. You can change the AccountOwner at any time, subject to limitations imposedby federal and state law. To avoid adverseincome tax consequences, the new AccountOwner must meet the requirements described in
the Program Disclosure Statement. Thedesignation of the new Account Owner will beeffective upon receipt of the appropriate form,properly completed.
(d) Choice of Investment Option. Money investedin an account is invested in the Investment Optionor Options that you designate in the EnrollmentForm. You may change the Investment Options orOptions in which money is invested twice everycalendar year.
Section 2. Contributions.
(a) Contributions shall be in cash equivalents aspermitted by the Program Disclosure Statement.
(b) You are subject to the contribution limitsestablished by applicable law and set forth in theProgram Disclosure Statement.
Section 3. Distributions and Terminations.
You may direct the Trustee to distribute part or allof the money in your account at any time.
(a) You must complete the appropriate form orfollow such other procedures for the withdrawalof money as the Program Manager maydesignate. The Program Manager may changethe form or modify the procedures forwithdrawing money from an account from time totime.
(b) You acknowledge the earnings portion of aNon-Qualified Withdrawal, as defined in theProgram Disclosure Statement, will be included inyour income for federal and state income taxpurposes and may be subject to an additional10% federal tax.
(c) Notwithstanding any other provision of thisAgreement, the Trustee or the Program Managermay terminate an account at any time upon adetermination that you have provided false ormisleading information to the Trust or theProgram Manager. The Trustee will pay you thebalance remaining in the account, less any fees, ifapplicable.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
46
Exhibit A - Participation agreement
Section 4. Your Representations andAcknowledgments.
You hereby represent and warrant to, and agreewith, the Trust, the Trustee and the ProgramManager as follows:
(a) You have accepted, read and understand theProgram Disclosure Statement for EnableAlabama and have carefully reviewed all theinformation contained therein, includinginformation provided by or with respect to theTrust and the Program Manager. You also agreethat you have had the opportunity to review andhereby approve and consent to all fees andexpenses incurred on my account as described inthis Program Disclosure Statement andParticipation Agreement. In making a decision toopen an account and enter into this ParticipationAgreement, you have not relied upon anyrepresentations or other information, whether oralor written, other than as set forth in the ProgramDisclosure Statement and this ParticipationAgreement.
(b) You acknowledge and agree that the value ofany account will increase or decrease based onthe investment performance of the InvestmentOptions of the Trust in which the account is theninvested. YOU UNDERSTAND THAT THE VALUEOF ANY ACCOUNT MAY BE MORE OR LESSTHAN THE AMOUNT INVESTED IN THEACCOUNT. You agree that all investmentdecisions will be made by the NebraskaInvestment Council or any other adviser hired bythe Trust, and that you may not direct theinvestment of any contributions to the Trust (orearnings thereon) more than two times in anycalendar year. You also acknowledge and agreethat none of the State of Alabama, the State ofNebraska or their officials/employees, theNebraska Investment Council, the Trust, theAlabama State Treasurer, the Trustee, theNebraska State Investment Officer, the ProgramManager, or any other agent, adviser orconsultant retained by or on behalf of the Trustmakes any guarantee that you will not suffer a lossof the amount invested in any account.
(c) You understand that so long as First NationalBank of Omaha serves as Program Manager forEnable Alabama and is performing services forthe Trust, it may follow the directives of theTrustee and the Nebraska Investment Council.When acting in such capacity, First National Bankof Omaha will have no liability to you or any otherperson.
(d) You acknowledge and agree that no accountwill be used as collateral or security for any loan.Any attempted use of an account as collateral orsecurity for a loan will be void.
(e) You acknowledge and agree that the Trust willnot loan any assets to you.
(f) You acknowledge and agree that the Trust isestablished and maintained by the Treasurer ofthe State of Nebraska, pursuant to state law, andis intended to qualify for certain federal incometax consequences under Section 529A of theInternal Revenue Code. You further acknowledgethat such federal and state laws are subject tochange, sometimes with retroactive effect, andthat neither the State of Alabama, the State ofNebraska or their officials/employees, theNebraska Investment Council, the Trust, theAlabama State Treasurer, the Trustee, theNebraska State Investment Officer, the ProgramManager nor any adviser or consultant retainedby the Trust makes any representation that suchstate or federal laws will not be changed orrepealed.
(g) You acknowledge and agree that the Trust isthe record owner of the shares of any underlyinginvestments in which each Investment Option isinvested and that you will have no right to vote,or direct the voting of, any proxy with respect tosuch shares.
(h) You understand and agree that the accountand this Participation Agreement are subject tosuch rules and regulations as the State Treasurermay promulgate in accordance with Nebraskastate law. You also understand and agree that alldecisions and interpretations by the NebraskaState Treasurer, the Nebraska Investment Council,and the Program Manager in connection with the
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
47
Exhibit A - Participation agreement
Plan shall be final and binding on you and anysuccessors.
Section 5. Fees and Expenses.
The Trust will make certain charges against eachaccount in order to provide for the costs ofadministration of the accounts and such otherpurposes as the Trustee shall determineappropriate.
(a) Program Management Fee. You acknowledgeand agree that, with the exception of theChecking Investment Option, each InvestmentOption is subject to a Program Management Feeas set forth in the Program Disclosure Statement.
(b) Investment Management Fees. Youacknowledge and agree that except for the BankSavings Investment Option and the CheckingInvestment Option, each of the underlyinginvestments may have investment managementfees and other expenses set forth in the ProgramDisclosure Statement.
(c) Change in fees. You acknowledge and agreethat the charges described above may beincreased or decreased as the Trustee shalldetermine to be appropriate.
Section 6. Necessity of Qualification.
The Trust intends to qualify for favorable federaltax treatment under Internal Revenue CodeSection 529A. You agree and acknowledge thatqualification under Section 529A is vital and agreethat the Trustee may amend this ParticipationAgreement upon a determination that such anamendment is required to maintain suchqualification.
Section 7. Reporting.
The Trust, through the Program Manager, willmake quarterly reports of account activity and thevalue of each account. Account information mayalso be obtained via the Plan’s website.
Section 8. Account Owner’s Indemnity.
You recognize that an account will be establishedbased upon your statements, agreements,representations and warranties set forth in thisParticipation Agreement and the Enrollment
Form. You agree to indemnify and to holdharmless the Trust, the State of Alabama, theState of Nebraska and its officials/employees, theNebraska Investment Council, the Alabama StateTreasurer, the Trustee, the Nebraska StateInvestment Officer, First National Bank of Omahaor its authorized agents or their affiliates, or theDistributor and their respective representativesfrom and against any and all loss, damage,liability or expense, including costs of reasonableattorneys’ fees to which they may be put or whichthey may incur by reason of, or in connectionwith, any breach by you of youracknowledgments, representations or warrantiesor any failure of you to fulfill any covenants oragreements set forth herein. You agree that allstatements, representations and warranties willsurvive the termination of the account.
Section 9. Amendment and Termination.
Nothing contained in the Trust or thisParticipation Agreement shall constitute anagreement or representation by the Trustee oranyone else that the Trust will continue inexistence. At any time, the Trustee may amendthis Participation Agreement or suspend orterminate the Trust by giving written notice ofsuch action to the Account Owner, so long as,after the action, the assets in your account are stillheld for your exclusive benefit subject toapplicable law.
Section 10. Governing Law.
This Participation Agreement shall be governedand interpreted in accordance with the laws of theState of Nebraska. All parties agree that exclusivevenue and jurisdiction for any legal proceedingsrelated to this Participation Agreement or EnableAlabama shall be in the State of Nebraska.
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
48
EXHIBIT B – MUTUAL FUNDS DESCRIPTIONS
The mutual funds underlying the Growth,Moderate, and Conservative Investment Optionsare described below. See “Part 4 – InvestmentOptions” for a description of the percentageallocation of the Investment Options to eachfund.
Vanguard Total Stock Market Index FundInstitutional Plus Shares (VSMPX)
Investment Objective
The Fund seeks to track the performance of abenchmark index that measures the investmentreturn of the overall stock market.
Principal Investment Strategies
The Fund employs an indexing investmentapproach designed to track the performance ofthe CRSP US Total Market Index, which representsapproximately 100% of the investable U.S. stockmarket and includes large-, mid-, small-, andmicro-cap stocks regularly traded on the NewYork Stock Exchange and Nasdaq. The Fundinvests by sampling the Index, meaning that itholds a broadly diversified collection of securitiesthat, in the aggregate, approximates the full Indexin terms of key characteristics. These keycharacteristics include industry weightings andmarket capitalization, as well as certain financialmeasures such as price/earnings ratio anddividend yield.
Principal Risks
An investment in the Fund could lose money overshort or even long periods. You should expect theFund’s share price and total return to fluctuatewithin a wide range, like the fluctuations of theoverall stock market. The Fund is subject to thefollowing risks, which could affect the Fund’sperformance:
• Stock market risk, which is the chance thatstock prices overall will decline. Stockmarkets tend to move in cycles, with periodsof rising prices and periods of falling prices.In addition, the Fund’s target index may, attimes, become focused in stocks of aparticular market sector, which would subjectthe Fund to proportionately higher exposureto the risks of that sector.
• Index sampling risk, which is the chance thatthe securities selected for the Fund, in theaggregate, will not provide investmentperformance matching that of the Fund’starget index. Index sampling risk for the Fundshould be low.
An investment in the Fund is not a deposit of abank and is not insured or guaranteed by theFederal Deposit Insurance Corporation or anyother government agency.
Vanguard International Stock Index FundAdmiral Shares (VTIAX)
Investment Objective
The Fund seeks to track the performance of abenchmark index that measures the investmentreturn of stocks issued by companies located indeveloped and emerging markets, excluding theUnited States.
Principal Investment Strategies
The Fund employs an indexing investmentapproach designed to track the performance ofthe FTSE Global All Cap ex US Index, a float-adjusted market- capitalization-weighted indexdesigned to measure equity market performanceof companies located in developed and emergingmarkets, excluding the United States. As ofOctober 31, 2017, the Index includes 5,902 stocksof companies located in 46 countries, and thelargest markets covered in the Index were Japan,the United Kingdom, Canada, France, Germany,and China (which made up approximately 17%,13%, 7%, 7%, 7%, and 6%, respectively, of theIndex’s market capitalization). The Fund investsall, or substantially all, of its assets in the commonstocks included in its target index.
Principal Risks
An investment in the Fund could lose money overshort or even long periods. You should expect theFund’s share price and total return to fluctuatewithin a wide range. The Fund is subject to thefollowing risks, which could affect the Fund’sperformance:
• Stock market risk, which is the chance thatstock prices overall will decline. Stock..
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
49
Exhibit B - Mutual funds descriptions
markets tend to move in cycles, with periodsof rising prices and periods of falling prices.The Fund’s investments in foreign stocks canbe riskier than U.S. stock investments.Foreign stocks tend to be more volatile andless liquid than U.S. stocks. The prices offoreign stocks and the prices of U.S. stocksmay move in opposite directions. In addition,the Fund’s target index may, at times,become focused in stocks of a particularmarket sector, which would subject the Fundto proportionately higher exposure to therisks of that sector.
• Investment style risk, which is the chance thatreturns from non-U.S. small- andmid-capitalization stocks will trail returns fromglobal stock markets. Historically, non-U.S.small- and mid-cap stocks have been morevolatile in price than the large-cap stocks thatdominate the global markets, and they oftenperform quite differently.
• Country/regional risk, which is the chance thatworld events—such as political upheaval,financial troubles, or natural disasters—willadversely affect the value of securities issuedby companies in foreign countries or regions.Because the Fund may invest a large portionof its assets in securities of companies locatedin any one country or region, the Fund’sperformance may be hurt disproportionatelyby the poor performance of its investments inthat area. Country/regional risk is especiallyhigh in emerging markets.
• Currency risk, which is the chance that thevalue of a foreign investment, measured inU.S. dollars, will decrease because ofunfavorable changes in currency exchangerates. Currency risk is especially high inemerging markets.
• Emerging markets risk, which is the chancethat the stocks of companies located inemerging markets will be substantially morevolatile, and substantially less liquid, than thestocks of companies located in moredeveloped foreign markets because, amongother factors, emerging markets can have
greater custodial and operational risks; lessdeveloped legal, tax, regulatory, andaccounting systems; and greater political,social, and economic instability thandeveloped markets.
An investment in the Fund is not a deposit of abank and is not insured or guaranteed by theFederal Deposit Insurance Corporation or anyother government agency.
Vanguard Total Bond Market Index FundInstitutional Plus Shares (VBMPX)
Investment Objective
The Fund seeks to track the performance of abroad, market-weighted bond index.
Principal Investment Strategies
The Fund employs an indexing investmentapproach designed to track the performance ofthe Bloomberg Barclays U.S. Aggregate FloatAdjusted Index. This Index represents a widespectrum of public, investment-grade, taxable,fixed income securities in the United States—including government, corporate, andinternational dollar-denominated bonds, as wellas mortgage-backed and asset-backedsecurities—all with maturities of more than 1 year.
The Fund invests by sampling the Index, meaningthat it holds a broadly diversified collection ofsecurities that, in the aggregate, approximates thefull Index in terms of key risk factors and othercharacteristics. All of the Fund’s investments will beselected through the sampling process, and at least80% of the Fund’s assets will be invested in bondsheld in the Index. The Fund maintains a dollar-weighted average maturity consistent with that ofthe Index, which generally ranges between 5 and10 years.
Principal Risks
An investment in the Fund could lose money overshort or even long periods. You should expect theFund’s share price and total return to fluctuatewithin a wide range, like the fluctuations of theoverall bond market. The Fund is subject to the
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
50
Exhibit B - Mutual funds descriptions
following risks, which could affect the Fund’sperformance:
• Interest rate risk, which is the chance thatbond prices will decline because of risinginterest rates. Interest rate risk should bemoderate for the Fund because it investsprimarily in short- and intermediate-termbonds, whose prices are less sensitive tointerest rate changes than are the prices oflong-term bonds.
• Income risk, which is the chance that theFund’s income will decline because of fallinginterest rates. Income risk is generally high forshort-term bond funds and moderate forintermediate-term bond funds, so investorsshould expect the Fund’s monthly income tofluctuate accordingly.
• Call risk, which is the chance that duringperiods of falling interest rates, issuers ofcallable bonds may call (redeem) securitieswith higher coupon rates or interest ratesbefore their maturity dates. The Fund wouldthen lose any price appreciation above thebond’s call price and would be forced toreinvest the unanticipated proceeds at lowerinterest rates, resulting in a decline in theFund’s income. Call risk should be moderatefor the Fund because it invests only a portionof its assets in callable bonds.
• Prepayment risk, which is the chance thatduring periods of falling interest rates,homeowners will refinance their mortgagesbefore their maturity dates, resulting inprepayment of mortgage-backed securitiesheld by the Fund. The Fund would then loseany price appreciation above the mortgage’sprincipal and would be forced to reinvest theunanticipated proceeds at lower interestrates, resulting in a decline in the Fund’sincome. Prepayment risk is moderate for theFund.
• Extension risk, which is the chance thatduring periods of rising interest rates, certaindebt obligations will be paid off substantiallymore slowly than originally anticipated, and
the value of those securities may fall. Forfunds that invest in mortgage-backedsecurities, extension risk is the chance thatduring periods of rising interest rates,homeowners will prepay their mortgages atslower rates. Extension risk is generallymoderate for intermediate-term bond funds.
• Credit risk, which is the chance that a bondissuer will fail to pay interest or principal in atimely manner or that negative perceptions ofthe issuer’s ability to make such payments willcause the price of that bond to decline.Credit risk should be low for the Fundbecause it purchases only bonds that are ofinvestment-grade quality.
• Index sampling risk, which is the chance thatthe securities selected for the Fund, in theaggregate, will not provide investmentperformance matching that of the Fund’starget index. Index sampling risk for the Fundshould be low.
• Liquidity risk, which is the chance that theFund may not be able to sell a security in atimely manner at a desired price.
An investment in the Fund is not a deposit of abank and is not insured or guaranteed by theFederal Deposit Insurance Corporation or anyother government agency.
Vanguard Short-Term Bond Index FundInstitutional Plus Shares (VBIPX)
Investment Objective
The Fund seeks to track the performance of amarket-weighted bond index with a short-termdollar-weighted average maturity.
Principal Investment Strategies
The Fund employs an indexing investmentapproach designed to track the performance ofthe Bloomberg Barclays U.S. 1–5 YearGovernment/Credit Float Adjusted Index. ThisIndex includes all medium and larger issues ofU.S. government, investment-grade corporate,and investment-grade international dollar-denominated bonds that have maturities between1 and 5 years and are publicly issued...
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
51
Exhibit B - Mutual funds descriptions
The Fund invests by sampling the Index, meaningthat it holds a range of securities that, in theaggregate, approximates the full Index in terms ofkey risk factors and other characteristics. All of theFund’s investments will be selected through thesampling process, and at least 80% of the Fund’sassets will be invested in bonds held in the Index.The Fund maintains a dollar-weighted averagematurity consistent with that of the Index, whichgenerally does not exceed 3 years.
Principal Risks
The Fund is designed for investors with a lowtolerance for risk, but you could still lose moneyby investing in it. The Fund is subject to thefollowing risks, which could affect the Fund’sperformance:
• Income risk, which is the chance that theFund’s income will decline because of fallinginterest rates. Income risk is generally high forshort-term bond funds, so investors shouldexpect the Fund’s monthly income tofluctuate.
• Interest rate risk, which is the chance thatbond prices will decline because of risinginterest rates. Interest rate risk should be lowfor the Fund because it invests primarily inshort-term bonds, whose prices are much lesssensitive to interest rate changes than are theprices of long-term bonds.
• Credit risk, which is the chance that a bondissuer will fail to pay interest or principal in atimely manner or that negative perceptions ofthe issuer’s ability to make such payments willcause the price of that bond to decline.Credit risk should be low for the Fundbecause it purchases only bonds that are ofinvestment-grade quality.
• Index sampling risk, which is the chance thatthe securities selected for the Fund, in theaggregate, will not provide investmentperformance matching that of the Fund’starget index. Index sampling risk for the Fundshould be low.
• Liquidity risk, which is the chance that theFund may not be able to sell a security in atimely manner at a desired price.
An investment in the Fund is not a deposit of abank and is not insured or guaranteed by theFederal Deposit Insurance Corporation or anyother government agency.
Vanguard Short-Term Inflation-ProtectedSecurities Index Fund Institutional Shares(VTSPX)
Investment Objective
The Fund seeks to track the performance of abenchmark index that measures the investmentreturn of inflation-protected public obligations ofthe U.S. Treasury with remaining maturities of lessthan 5 years.
Principal Investment Strategies
The Fund employs an indexing investmentapproach designed to track the performance ofthe Bloomberg Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. TheIndex is a market-capitalization-weighted indexthat includes all inflation-protected publicobligations issued by the U.S. Treasury withremaining maturities of less than 5 years.
The Fund attempts to replicate the target indexby investing all, or substantially all, of its assets inthe securities that make up the Index, holdingeach security in approximately the sameproportion as its weighting in the Index. The Fundmaintains a dollar-weighted average maturityconsistent with that of the target index, whichgenerally does not exceed 3 years.
Principal Risks
The Fund is designed for investors with a lowtolerance for risk, but you could still lose moneyby investing in it. The Fund is subject to thefollowing risks, which could affect the Fund’sperformance:
• Income fluctuations. The Fund’s quarterlyincome distributions are likely to fluctuateconsiderably more than the incomedistributions of a typical bond fund. In fact,
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
52
Exhibit B - Mutual funds descriptions
under certain conditions, the Fund may nothave any income to distribute. Incomefluctuations associated with changes ininterest rates are expected to be low;however, income fluctuations associated withchanges in inflation are expected to be high.Overall, investors can expect incomefluctuations to be high for the Fund.
• Interest rate risk, which is the chance that thevalue of a bond will fluctuate because of achange in the level of interest rates. Althoughinflation-indexed bonds seek to provideinflation protection, their prices may declinewhen interest rates rise and vice versa.Because the Fund’s dollar-weighted averagematurity is expected to be 5 years or less,interest rate risk is expected to be low for theFund.
An investment in the Fund is not a deposit of abank and is not insured or guaranteed by theFederal Deposit Insurance Corporation or anyother government agency.
Vanguard Federal Money Market FundInvestor Shares (VMFXX)Investment Objective
The Fund seeks to provide current income whilemaintaining liquidity and a stable share price of$1.
Principal Investment Policies
The Fund invests primarily in high-quality, short-term money market instruments issued by theU.S. government and its agencies andinstrumentalities. Although these securities arehigh-quality, most of the securities held by theFund are neither guaranteed by the U.S. Treasurynor supported by the full faith and credit of theU.S. government. To be considered high-quality,a security generally must be rated in one of thetwo highest credit-quality categories for short-term securities by at least two nationallyrecognized rating services (or by one, if only onerating service has rated the security). The Fundmaintains a dollar-weighted average maturity of60 days or less and a dollar-weighted average lifeof 120 days or less.
Under the new money market reforms,government money market funds are required toinvest at least 99.5% of their total assets in cash,government securities, and/or repurchaseagreements that are collateralized solely bygovernment securities or cash (collectively,government securities). The Fund generallyinvests 100% of its assets in government securitiesand therefore will satisfy the 99.5% requirementfor designation as a government money marketfund.
Principal Risks
The Fund is designed for investors with a lowtolerance for risk; however, the Fund is subject tothe following risks, which could affect the Fund’sperformance:
• Income risk, which is the chance that theFund’s income will decline because of fallinginterest rates. Because the Fund’s income isbased on short-term interest rates—whichcan fluctuate significantly over shortperiods—income risk is expected to be high.
• Manager risk, which is the chance that poorsecurity selection will cause the Fund tounderperform relevant benchmarks or otherfunds with a similar investment objective.
• Credit risk, which is the chance that the issuerof a security will fail to pay interest or principalin a timely manner or that negative perceptionsof the issuer’s ability to make such paymentswill cause the price of that security to decline.Credit risk should be very low for the Fundbecause it invests primarily in securities that areconsidered to be of high quality.
You could lose money by investing in this Fund.Although a money market fund seeks topreserve the value of an investment at $1 pershare, it cannot guarantee it will do so.Investment in this Fund is not insured orguaranteed by the FDIC or any othergovernment agency. The sponsor has no legalobligation to provide financial support to theunderlying fund, and you should not expect thatthe sponsor will provide financial support to theunderlying fund at any time...
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
....
..
53
Page intentionally left blank.
54
Page intentionally left blank.
55
Page intentionally left blank.
56
Enable Savings Plan AlabamaP.O. Box 30274Omaha, NE 68103-1374
866-833-7949 (Toll-free)www.EnableAL.com
The Nebraska Achieving a Better Life Experience Program TrustEnable Savings Plan AlabamaProgram Disclosure Statement
February 28, 2019
ESPAPDS0219