What is an ABLE Account: How They Work & ABLE Account Rules

How an ABLE Account Can Help Your Family Save Money

An ABLE account (Achieving a Better Life Experience account) is a tax-advantaged savings account designed to improve the financial security and quality of life for individuals with disabilities. These accounts allow beneficiaries to save and invest money for disability-related expenses without jeopardizing eligibility for essential government benefits such as Supplemental Security Income (SSI) and Medicaid. Created under the Achieving a Better Life Experience Act of 2014, ABLE accounts have become a cornerstone of financial planning and special needs planning for families supporting loved ones with disabilities.

How Do ABLE Accounts Work?

ABLE accounts function similarly to 529 college savings plans. Contributions to an ABLE account are made with after-tax dollars and grow tax-free, provided the funds are used for qualified disability expenses (QDEs). These expenses can include housing, education, healthcare, transportation, assistive technology, and more.

The account is owned by the individual with the disability, known as the beneficiary, but family members, friends, and others can contribute funds. Each year, contributions are capped at $19,000 (as of 2025). However, beneficiaries who are employed may contribute additional earnings under the "ABLE to Work Act," allowing them to save even more.

ABLE accounts are administered by state programs, and while beneficiaries can open accounts in any state that accepts out-of-state residents, some programs offer unique benefits such as lower fees or state tax advantages. Comparing plans is an important step in maximizing the value of an ABLE account.

Key ABLE Account Rules

Understanding the rules governing ABLE accounts is critical to ensuring that they remain a useful financial tool:

1. Eligibility: To open an ABLE account, the beneficiary must have a significant disability with an onset before age 26. They must also meet the criteria for receiving SSI or Social Security Disability Insurance (SSDI), or have a physician’s certification confirming their disability. Finally, they must also earn income below the federal poverty line and have less than $2000 in countable resources.
2. Contribution Limits: Annual contributions are limited to $19,000 (as of 2025). Beneficiaries who are employed may contribute additional funds equal to the lesser of their gross income or the federal poverty level for a one-person household.
3. Qualified Expenses: Funds must be used for QDEs, which include housing, transportation, healthcare, education, and more. Using funds for non-qualified expenses may result in tax penalties and could affect eligibility for government benefits.
4. Impact on Benefits: ABLE account balances up to $100,000 do not affect SSI eligibility. Balances exceeding this amount may temporarily suspend SSI benefits but will not impact Medicaid eligibility.

Easy to Set Up

One of the many advantages of ABLE accounts is how straightforward they are to set up. Opening an account typically involves a simple online process through a state ABLE program. Families and individuals can choose from various programs, compare features, and complete the setup in just a few steps.

Benefits of ABLE Accounts

ABLE accounts empower individuals with disabilities to plan for their financial future while maintaining access to essential benefits. They provide a flexible and tax-advantaged way to cover necessary expenses, offering families peace of mind. Additionally, the ability to save without fear of losing benefits helps beneficiaries achieve greater independence and financial security.

Take Advantage of ABLE Accounts for a Secure Future

An ABLE account is a powerful tool for individuals with disabilities and their families. By understanding how these accounts work and adhering to the rules, beneficiaries can enjoy greater financial freedom and security. To learn more about ABLE accounts and how they can benefit your family, watch our free webinar, Gifting to Persons with Disabilities Through ABLE Accounts.