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- An ABLE account is a tax-free savings or investment account for people with disabilities.
- Open an ABLE account by applying to a state's ABLE program online.
- You may deposit $18,000 in an ABLE account in 2024, plus additional funds if you work.
Having a disability often requires extensive costs, and inequity in banking can make it difficult for people with disabilities to have opportunities to manage daily expenses and build wealth.
If you have a disability, you can gain some control over your finances by opening an ABLE account through an ABLE account state program.
What is an ABLE account?
Definition and overview
Achieving a Better Life Experience accounts, or ABLE accounts, are tax-free savings accounts or investment accounts for people that became disabled before their 26th birthday.
An ABLE account lets people with disabilities manage their money without worrying about how it may affect government assistance eligibility for programs like Social Security or Medicaid.
"ABLE accounts allow folks the opportunity to take some control over their finances," said Miranda Kennedy, director of the ABLE National Resource Center. "Either for themselves as a person with a disability, or a family member who's supporting someone who might not have the capacity in being able to establish that or support them."
You may use money in the account for any expenses related to your disability, including transportation, food, education, and housing.
History and purpose
The Achieving a Better Life Experience (ABLE) Act was signed into law in December 2014. It gave states the ability to establish tax-advantaged savings programs for eligible disabled Americans.
The Tax Cuts and Jobs Act of 2017 increased the amount of money a beneficiary or member of their family could contribute to an ABLE account and allowed beneficiaries to claim the saver's credit for a portion of their contribution to lower their annual tax bill. It also permitted rollovers from a 529 college savings plan in certain circumstances.
Eligibility for ABLE accounts
Who can open an ABLE account?
To be eligible for an ABLE account, you must have met one of the following requirements before the age of 26:
- Qualified for SSI if you had a disability or blindness
- Received disability insurance benefits, childhood disability benefits, or disabled widow's benefits
- Received a disability certification, or your parent or guardian can verify that you had a disability before the age of 26
People commonly mistake ABLE accounts as accounts that are solely for young people, Kennedy said. However, anyone who is at least 18 years old can apply if they meet the requirements.
A parent or legal guardian who acts as a legally authorized representative can also open an account for a qualifying person with disabilities and manage it.
Kennedy pointed out that people with ABLE accounts can also have a special needs trust, so you aren't disqualified if you have a trust. A special needs trust allows you to establish a financial guardian for a person with disabilities if a parent or guardian dies. The financial guardian can help manage any inherited funds.
Beginning in 2026, the qualifying age of disability onset will increase from 26 to 46.
Benefits of ABLE accounts
Tax advantages
Interest or dividends earned in an ABLE account are tax free, provided the funds are spent on qualifying expenses. As a result, there's no federal tax deduction available for contributions you make to an ABLE account.
Some states offer tax deductions or credits for contributions made by state residents to an ABLE savings account.
Various state ABLE plans offer investment options, in addition to savings accounts, which also grow tax free.
Financial flexibility
An ABLE account is a great option if you are a person with a disability looking for a way to manage your personal finances. You can open and set up the account by yourself and make financial decisions independently.
It's also a good choice if you or a family member with a disability feel like you have limited opportunities for saving money.
Kennedy told Insider that ABLE accounts can also be used as a type of emergency fund. "We had a guy share on a podcast, "'What if you were in Minnesota and your furnace goes out in the middle of winter, and that's $4,000. What are you going to do?' If you have this money in an ABLE account, your stress goes down, and your quality of life goes up. You're able to be more in control, and that's significant," she said.
Impact on benefits
If you are currently receiving government assistance for housing or food, there is a limit to how much money you can have in cash or a savings account and continue receiving benefits (usually no more than $2,000).
The first $100,000 in your ABLE account will not count toward Supplemental Security Income (SSI) eligibility. Any amount of ABLE savings up to the plan limit — between $235,000 and $596,925, according to the ABLE National Resource Center — will not affect eligibility for the following programs:
- Medicare parts A, B, C, or D
- Medicaid
- Federal housing assistance
- Social Security and Disability insurance
- Supplemental Nutrition and Assistance program
- Free Application for Federal Student Aid
How to open and manage an ABLE account
How to open an account
You need to apply for an account through an ABLE state program. Currently, there are about 49 ABLE state programs available, with active programs in all states except Idaho, North Dakota, South Dakota, and Wisconsin. Some programs even accept non-residents.
You can look at several state programs using the ABLE National Resource Center's comparison tool.
"There's going to be one that's a good fit for some individual situations that might not be good for another," said Kennedy. "But people should always look at their home state first because there are instances where a state program will incentivize and further support someone opening a plan in their own state if they're a resident of that state."
Once you've chosen a state program, you can fill out an application online through the state ABLE program website. The application will ask for basic identification information, and you can get help over the phone or through email if you have any questions when filling it out.
ABLE account contribution limits
The ABLE account contribution limit for 2024 is $18,000. The annual limit is subject to inflation adjustments each year. State programs set lifetime contribution limits, and many exceed $500,000.
If you have a job and you and your employer are not contributing to a retirement plan, you can contribute more to an ABLE account. You can deposit an amount that's equal to your annual gross salary or an amount equal to the individual federal poverty level — whichever is less.
The federal poverty level for 2024 is $14,580 in the continental United States, $16,770 in Hawaii, and $18,210 in Alaska.
Account management tips
If you're curious to learn more about the ABLE program, the ABLE National Resource Center has many resources and comprehensive guides.
People with disabilities navigating financial challenges can also look to the National Disability Institute Financial Resilience Center for additional ways to manage your money. The center will answer questions about health and managing money, and you can talk to a certified financial counselor, read through guides, or watch videos in American Sign Language.
ABLE Account FAQs
ABLE accounts are tax-free savings or investment accounts for eligible disabled people to pay for expenses related to housing, education, employment, and healthcare.
ABLE accounts are available to people with a significant disability that began before age 26. If someone is receiving SSI or SSDI, they are automatically eligible to open an ABLE account. Otherwise they will need to provide a certification of disability with an onset before the age of 26 from a physician.
Money in an ABLE account has to be used for qualified disability expenses, including costs related to basic living expenses, health and wellness, housing, education, employment training, transportation, assistive technology, financial management, legal fees, and funerals.
The 2024 contribution limit is $18,000. Beneficiaries who are not contributing to a retirement plan through work and whose employer is not contributing to a retirement plan on their behalf can deposit up to $14,580 (or $18,210 in Alaska and $16,770 in Hawaii).
ABLE savings balances do not affect eligibility for federal benefits programs for housing, food, college financial aid, Medicare, Medicaid, and Social Security retirement or disability benefits. The first $100,000 in ABLE savings are not counted for Supplemental Security Income eligibility.
