What is an ABLE Account?

Guest article provided by: thesavingdude.com

An ABLE account is a type of tax-advantaged savings account designed to help individuals with disabilities save and pay for qualified disability-related expenses without losing eligibility for certain means-tested government benefit programs, such as Medicaid and Supplemental Security Income (SSI).

ABLE accounts were created by the federal government in 2014, under the Achieving a Better Life Experience (ABLE) Act. The account is typically owned by the individual with the disability, although it can also be owned by a parent, legal guardian, or agent under a power of attorney.

Benefits of ABLE Accounts

Some of the benefits of ABLE accounts include:

  • Tax-free growth of investments
  • Tax-free withdrawals for qualified expenses
  • The ability to save up to a certain limit without affecting eligibility for means-tested government benefits

These benefits can help individuals with disabilities and their families save money and better manage their finances.

Eligibility for ABLE Accounts

To be eligible for an ABLE account, an individual must have a significant disability that occurred before age 26. Additionally, the individual must either be receiving benefits under the Supplemental Security Income (SSI) program or Social Security Disability Insurance (SSDI), or have a condition listed on the Social Security Administration’s list of compassionate allowances.

Contributions to ABLE Accounts

Contributions to ABLE accounts can come from a variety of sources, including the account owner, family members, and friends. The maximum annual contribution limit varies by state, but it is typically $15,000 per year. Additionally, certain individuals with disabilities may be able to contribute additional amounts from their employment income.

Qualified Expenses

Qualified expenses that can be paid for using funds from an ABLE account include:

  • Education
  • Housing
  • Transportation
  • Employment training and support
  • Assistive technology and personal support services
  • Health, prevention, and wellness services
  • Financial management and administrative services
  • Legal fees

It’s important to note that any funds withdrawn from an ABLE account for non-qualified expenses may be subject to income tax and a 10% penalty.


Overall, ABLE accounts provide a valuable resource for individuals with disabilities and their families to save and pay for qualified disability-related expenses without jeopardizing eligibility for means-tested government benefit programs. By understanding the eligibility requirements, contribution limits, and qualified expenses, individuals with disabilities and their families can better utilize these accounts to manage their finances and improve their quality of life.