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What is an ABLE Account? An Introduction

ABLE Accounts and the ABLE Act

Since the passage of the Achieving a Better Life Experience (ABLE) Act in

2014, tens of thousands of people with disabilities have opened up new,

special tax-free savings accounts to save for disability-related expenses.

These accounts, popularly known as ABLE accounts, allow many people with

disabilities or their families to save while the account owner remains on

government assistance. The accounts can be used in creative ways, either

alone or in conjunction with other planning tools, to make a big difference to

families with special needs children.

ABLE Account Contributions

ABLE accounts are modeled on popular 529 college savings plans, and are

state-based, just like the college plans.

Upon opening an ABLE account, people with disabilities and their families can

set aside up to $17,000 annually to spend on a wide range of “qualifying

disability expenses.” As long as the total in the ABLE account falls below

$100,000, the account’s funds are shielded from the income and resource

limits for Supplemental Security Income (SSI), Medicaid, and other

government benefits, thus allowing the account owner to maintain eligibility.

Who Is Eligible for an ABLE Savings Account?

However, not everyone can open an ABLE account. SSI and Social Security

Disability Insurance (SSDI) recipients are automatically eligible.

Others may only open an account if they obtain a certification from a licensed

physician attesting that they otherwise meet the Social Security

Administration’s definition of “disabled.”

Also, people are only eligible if they became disabled prior to age 26. This has

effectively excluded millions of peole whose disabilities developed via chronic

conditions, workplace injuries, or catastrophic events after turning 26. Note,

however, that this rule is due to change in 2026, when age 46 will become the

new age of eligibility.

ABLE Account Qualified Expenses

What may the money in an ABLE account be spent on? These accounts may

be used to pay for qualifying disability expenses of the account beneficiary,

such as:

  • the costs of treating the disability

  • education

  • housing

  • health care

  • legal fees

  • and more

The Internal Revenue Service (IRS) has urged states to interpret “qualifying

disability expenses” broadly. The ABLE Act itself defines the term as follows:

“Education, housing, transportation, employment training and support,

assistive technology and personal support services, health, prevention

and wellness, financial management and administrative services, legal

fees, expenses for oversight and monitoring, funeral and burial expenses,

and other expenses, which are approved by the Secretary under

regulations and consistent with the purposes of this section.”

ABLE Accounts by State

Most states have ABLE programs up and running, each with its own separate

rules for opening accounts. However, you are not limited to an ABLE program

in your state. Most state ABLE programs allow out-of-state residents to open

up accounts in their states, subject to certain rules.

While ABLE accounts are often opened by the beneficiaries’ family, adult

beneficiaries can open accounts in their own name, providing a level of

financial independence otherwise unavailable when utilizing trusts and more

complex savings tools.

Helpful Resources on ABLE Accounts

Because ABLE accounts come with many rules and possible pitfalls, consult

with a qualified special needs planner near you before setting one up.

Learn more about some of the practical uses for an ABLE account, as well as

the pros and cons of establishing one. Or, view an infographic featuring the

basics on ABLE accounts.

Access a directory of ABLE account programs by state.

For more on ABLE accounts, including fact sheets, articles and short webinars,

visit the ABLE National Resource Center.

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