ABLE accounts: how they work and who can benefit from them

For individuals with disabilities, ABLE accounts can offer a valuable way to save for the future. Unlike standard savings accounts, assets up to a certain level in these accounts do not impact benefits, allowing people to save money without costing them access to their government benefits.

These state-administered accounts were authorized by Congress in 2014 as part of the Achieving a Better Life Experience Act, after which ABLE accounts are named, and already, "an estimated 8 million people nationwide" qualify, said The Associated Press. Starting in 2026, access will increase "to an additional 6 million people, including 1 million veterans," the outlet added, citing Indiana State Treasurer Daniel Elliott.

What is an ABLE account?

An ABLE account is a "tax-advantaged savings account that helps people with disabilities and their families save for disability expenses without losing eligibility for other disability benefits such as Medicaid and [Supplemental Security Income] — and balances below $100,000 do not impact SSI benefits," said Fidelity.

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"Contributions can be made to the account by the beneficiary, friends or family members" (though, similar to a 529 plan, there are limits on how much can be contributed each year), said Investopedia. From there, the funds in ABLE accounts are "invested and grow tax-free," assuming they are used for qualified disability expenses.

For ABLE accounts, these expenses are those "related to your loved one's disability to help maintain or improve their quality of life, health or independence," said Fidelity. This can include medical treatment, housing, education and special-needs transportation, among other things.

If ABLE account assets are withdrawn for purposes other than these, the beneficiary will face a 10% penalty and must "pay income taxes on the portion of the withdrawal that consists of investment earnings, as opposed to contributions," said Intuit TurboTax.

Who is eligible for an ABLE account?

To be eligible for an ABLE account, a person's disability must have begun before age 26 (though this will rise to age 46 in 2026), and their disability must be "'terminal or long-term (more than 12 months)'" and result in "'marked and severe functional limitations,'" said the AP.

Additionally, to qualify, a person also needs to meet one of the following criteria:

1. A doctor has diagnosed their disability.

2. They are eligible for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) because of their disability.

How can you open an ABLE account?

ABLE accounts are state-administered, which means you will need to go directly to your state ABLE program's website to open an account. (Note that "four states — Idaho, North Dakota, South Dakota and Wisconsin — don't have active ABLE programs, but if a state accepts outside residents into its program you can open an ABLE account there, regardless of where you live," said Investopedia.)

The individual can open their account themselves, but if they are unable to, it may be done by their Person with Signature Authority (PSA) "who must be the Designated Beneficiary's power of attorney, conservator or legal guardian, spouse, parent, sibling or grandparent; or a representative payee appointed by the Social Security Administration (SSA) — in that order," said Fidelity.