What are ABLE Accounts & How do they work?
September 3, 2025
An ABLE account is a special savings and investment vehicle designed for people with disabilities. Established under Section 529A of the IRS tax code, these accounts allow eligible individuals to set aside money without losing access to most means-tested federal benefits.
If the funds are used for qualified disability expenses (QDEs), investment earnings inside the account grow tax-free and are not treated as taxable income. Common QDEs include housing, education, transportation, and medical expenses.
Currently, eligibility is limited to individuals whose disability began before age 26. Beginning January 1, 2026, the age of onset expands to 46, making millions more Americans eligible.
10 Key Things to Know About ABLE Accounts
1. Why ABLE accounts matter
Living with a disability often brings extra costs. Research from the National Disability Institute estimates that households with disabilities need 29% more income to maintain the same standard of living as those without. Yet many public assistance programs, such as SSI and Medicaid, restrict eligibility to individuals with less than $2,000 in countable resources.
An ABLE account helps break this cycle: up to $100,000 is excluded from SSI resource limits, and balances up to the state maximum (often $200,000–$500,000+) won’t affect eligibility for programs like Medicaid, SNAP, HUD, SSDI, FAFSA, and others.
2. Who qualifies
You may open an ABLE account if your disability began before age 26* and either:
● You already receive SSI or SSDI, or
● A licensed physician certifies that you have a “marked and severe” functional limitation.
● The account is always in the name of the person with the disability, though an authorized legal representative can manage it.
● *Age expands to 46 in 2026.
3. Comparing plans
There are currently 49 ABLE plans across the U.S. Some states offer tax credits or deductions if you enroll locally. Comparison tools from the ABLE National Resource Center make it easier to weigh fees, investment choices, and features.
4. Opening an account
Most plans allow online enrollment. You’ll need:
● Personal info (name, SSN, DOB, address)
● Banking details for your first contribution
● Optional: designate an ALR (Authorized Legal Representative) or beneficiary
You’ll also choose whether to use checking, savings, or investment options (or a mix).
5. Start simple, invest later
You don’t need to invest right away—many people begin with savings and debit card access, then shift to investment options as they grow more comfortable.
6. Contribution limits
Annual contributions are capped (indexed yearly), but employed account owners may contribute more under “ABLE to Work.” Friends, family, employers, and even trusts can also contribute. Funds from a 529 education account may be rolled into an ABLE account. In 2024, state balance caps ranged from $235,000 to nearly $600,000.
7. Best practices
A common approach is:
1. Deposit monthly benefits into a checking account for essential expenses.
2. Transfer extra into the ABLE account for tax-free growth.
3. Use ABLE funds strategically for qualified expenses.
8. Medicaid payback
When an ABLE account holder passes away, funds are first used for outstanding QDEs (including funeral costs). After that, Medicaid may claim repayment for services provided after the account was opened—though some states limit this requirement. Naming a beneficiary can ensure remaining funds are passed on appropriately.
9. Using ABLE alongside trusts
ABLE accounts can work together with special needs trusts (SNTs) or pooled trusts (PTs). For example, a trust can transfer money into an ABLE account to cover housing costs without reducing SSI benefits.
10. How funds can be used
QDEs are broadly defined and not limited to medical expenses. Examples include:
● Food and housing
● Transportation and assistive technology
● Education and job training
● Health, wellness, and personal support services
● Financial management, legal fees, and basic living costs
In practice, ABLE funds are designed to improve independence, security, and quality of life.
Bottom Line
ABLE accounts give people with disabilities and their families a powerful way to save and invest while protecting vital benefits. By easing the financial burden of disability-related costs, they offer greater flexibility, independence, and peace of mind. With eligibility expanding in 2026, now is an excellent time to explore whether an ABLE account could fit into your planning and help create long-term security.
Sources:
https://www.ablenrc.org/what-is-able/what-are-able-accounts/
Disclosure:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.