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ABLE Account Owners Who Work Can Save More Through 2025

If you are an individual with a disability who holds an ABLE account, your annual

contributions to this type of account generally must not exceed $17,000 a year, as of

2023. However, ABLE account owners who are employed can contribute their work

income to this type of account beyond the typical $17,000 annual threshold until the

end of 2025.

What Is an ABLE Account?

ABLE accounts are a type of savings account designed for people with

disabilities. They permit individuals with disabilities to save money, tax-free, without

putting their means-tested public benefits at risk.

As of 2023, up to $17,000 per year can be set aside into an ABLE account. The

account holder is allowed to have a total of up to $100,000 in their ABLE account

and remain eligible for such assistance programs as Medicaid and Supplemental

Security Income (SSI). Under current law, individuals who became disabled before

the age of 26 are eligible to open an ABLE account. Its funds can be used to cover

the costs of education, assistive technology, transportation, and other items.

ABLE accounts came into effect following the 2014 passage of the Achieving a

Better Life Experience (ABLE) Act. Several years later, an ABLE to Work provision

made it possible for ABLE account owners who work to start saving more. However,

the ABLE to Work Act is currently slated to expire at the end of 2025.

Who Can Benefit From the ABLE to Work Act?

If you are living with a disability and hold an ABLE account, you may benefit

from the ABLE to Work Act. There are a few rules of which you should be aware.

First, if you’re contributing to your ABLE account, you cannot also contribute to your

employer’s defined contribution plan (for example, a 401(k) plan).

Second, there is still a ceiling restricting exactly how much more you can add to your

ABLE account beyond the $17,000 yearly limit. This ceiling could either be dictated

by the federal poverty level in your state for the previous tax year, or by how much

you make in the current calendar year – whichever is less.

For instance, the federal poverty level for an individual in 2022 was $13,590 in most

states. If your gross income for 2023 is $15,000, this would be higher than the

previous tax year’s federal poverty guideline. Taking all of this into consideration,

you could set aside up to $30,590 in your ABLE account in 2023 ($17,000 + $13,590

= $30,590).

Note that your state may require you to submit a form along with your extra

contributions that demonstrates you are employed and in compliance with your

state’s rules. Certain states may have other requirements in place as well.

Helpful Resources

Be sure to connect with the ABLE account program in your state to learn more, as

well as your special needs planner.

Moors & Cabot, Inc - Johnson Cotroneo Group

999 Vanderbilt Beach Rd. Suite 102

Naples FL, 34108

239-449-7982, 239-449-7992

Investment Advisory Services provided by Johnson Cotroneo Group are through Moors and Cabot, Inc., an SEC-registered investment advisor.

Brokerage services and investment products offered through affiliated broker-dealer Moors and Cabot, Inc., Member FINRA, SIPC

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