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An Introduction to ABLE Accounts

Submitted by genesisl on Jul 5, 2017

For decades, persons with disabilities utilizing Supplemental Security Income (SSI), Medicaid, Supplemental Nutrition Assistance Program (SNAP) and housing programs have found it nearly impossible to save without losing benefits. In fact, individuals utilizing these public benefits often find themselves remain in poverty because eligibility for these programs require meeting the resource limits of the programs. In other words, if an individual wishes to continue to utilize these public benefits, he/she must remain poor. Not until 2014, when Congress drafted and President Obama signed the Achieving a Better Life Experience (ABLE) Act , were persons with disabilities allowed to have tax-free savings into a Section 529(a) account. The ABLE Act protects assets from the resource limits of public benefits programs for the needy.

The ABLE Act amends Section 529 of the Internal Revenue Service Code of 1986 to create tax-advantaged savings accounts for individuals with disabilities. Like a 529 College Savings Fund, an ABLE Account allows an individual to deposit into mutual funds. Contributions are made on an after-tax basis, and the savings then grow tax-free. It should be noted that withdrawals for non-qualified expenses are subject both to the regular income tax rate and federal and state penalties.

The ABLE Act was developed under the recognition that living with a disability requires additional and significant expenses for certain areas of life. These were placed in the legislation as qualified expenses, to be withdrawn from ABLE Accounts tax-free. Qualified expenses include:

  • Education - Tuition for preschool thru post-secondary education, books, supplies, and educational materials related to tutors and special education services.
  • Housing - Primary residence, including rent, purchase of a primary residence or an interest in a primary residence, mortgage payments, home improvements and modifications, maintenance and repairs, real property taxes, and utility charges.
  • Transportation - Mass transit, the purchase or modification of vehicles, and moving expenses.
  • Employment Support - Job-related training, assistive technology, and personal assistance supports and other expenses related to finding and maintaining employment.
  • Health and Wellness - Premiums for health insurance, mental health, medical, vision, and dental expenses, habilitation and rehabilitation services, durable medical equipment, therapy, respite care, long term services and supports, nutritional management, communication services and devices, adaptive equipment, assistive technology, and personal assistance.
  • Miscellaneous Expenses - Financial management and administrative services, legal fees, expenses for oversight, monitoring, and funeral and burial expenses.

It should also be noted that ABLE Accounts are not transferrable to heirs. When account holders pass away, their accounts become the property of their states’ Medicaid programs, by federal law. In addition, if savings accrue to $100,000 or higher, SSI will be suspended.

Presently, there are 23 states that have enacted ABLE Acts, and of these 17 accept enrollment from out of state residents. These are:

  • Alabama

  • Alaska

  • Illinois

  • Kansas

  • Massachusetts

  • Michigan

  • Minnesota

  • Nebraska

  • Nevada

  • North Carolina

  • Ohio

  • Oregon

  • Pennsylvania

  • Rhode Island

  • Tennessee

  • Virginia

  • Washington

Presently, only individuals with disabilities who acquire their disabilities before the age of 26 may establish an ABLE account. An individual does not have to be under the age of 26 to establish an ABLE account. The individual could be over 26 years old, but must have acquired the disabilities prior age 26. Unfortunately, many groups with disabilities are still excluded from this protection. Congress has been considering amending the age limit to age 46, with recognition that many disabilities occur later in life.

To learn more, please see the ABLE National Resource Center (ANRC) at  or go to .

Photo: William Mihalke

Bill Mihalke is a Assistant Specialist at the Center on Disability Studies (CDS), Co-Principal Investigator for the Disability Benefits Planning & Technical Assistance Project, and Associate Specialist for the Jobs Now Partnership Project.


Photo: Chin Lee

Chin Lee is a Junior Specialist at the Center on Disability Studies (CDS), Co-Principal Investigator for the Disability Benefits Planning & Technical Assistance Project, and Project Coordinator for the Jobs Now Partnership Project.