Answering Your Questions on ABLE Accounts

ABLE Accounts with image of woman and disabled child playing in a little league game.

By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC®:

Life with disabilities can have its own special challenges. The Achieving a Better Life Experience (ABLE) Act of 2014 enables the use of ABLE accounts to help families and caregivers with tax-free investing designated to help care for loved ones.

What is an ABLE account?

Much like 529 college savings programs, ABLE 529A accounts are administered by the individual states. When you contribute money, the state invests it based upon your investment strategy.

Who can have one?

  • U.S. citizens and permanent residents who can legally own securities
  • Individuals with a physician’s written and signed diagnosis
  • Individuals whose significant disabilities had an age onset before their 26th birthday

Note, the age restrictions on who can open an ABLE account does not mean that the individual opening the account must be younger than 26-years-old.

Those who meet the criteria and are already receiving Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) are already eligible to open them. Those who meet these criteria but are not receiving SSI or SSDI must obtain a disability certificate from their doctor before beginning the process.

Who can contribute to an ABLE account?

Though an ABLE account is owned by the disabled person as the beneficiary, contributors to the account can include:

  • Parents
  • Grandparents
  • The beneficiary
  • Extended Family
  • Friend
  • Charity or Trust

What are the specifics of ABLE accounts?

Without an ABLE account, those with disabilities may not earn more than $700 a month or have more than $2,000 in savings or assets without jeopardizing eligibility for government benefits. With an ABLE account, individuals with disabilities can currently save up to $15,000 per calendar year and can contribute up to $100,000 to the account. What’s more, that $100,000 is not counted toward the $2,000 limit on personal assets for a disabled person to qualify for SSI cash benefits, Medicaid and other public assistance sources.

Also, any money left in the ABLE account upon the beneficiary’s death would be subject to Medicaid payback. Despite that drawback, ABLE accounts are easy to establish and administer.

Just like 529 plans, ABLE beneficiaries are limited by their state of residency and they can enroll in any state’s program that does not limit out-of-state residency. Some states even offer debit cards for their ABLE account holders to make paying for qualified expenses easier. To compare each state’s plans, the ABLE national Resource Center website can help you.

What are the tax advantages for ABLE accounts?

The savings in ABLE accounts grow tax free if used for individuals with disabilities, provided they make withdrawals for qualified disability expenses such as:

  • Housing
  • Transportation
  • Education
  • Healthcare and wellness expenses
  • Assistive technology
  • Employment training and support services
  • Basic living needs associated with improvement of health, independence and quality of life
  • Financial management and administrative services
  • Legal and professional fees

If withdrawals are used for purposes other than qualified disability expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax.

In 2017, the Tax Cuts and Jobs Act (TCJA) provided an additional benefit for ABLE accounts. The TCJA allows for tax-free rollover of funds from 529 plans to ABLE accounts for the beneficiary or a family member of the beneficiary. Though the annual maximum contribution limit of $15,000 still applies.

Some states even offer their taxpayers a state income tax deduction on their contributions made to ABLE accounts in that state.

There are a variety of strategies for ABLE accounts, such as building savings, paying expenses now and saving for later, or saving for a rainy day. It’s best to seek the advice of your financial advisor to help you weigh your objectives. To find out more please call us at (972) 931-3818.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.


Kris Maksimovich is a financial advisor located at Global Wealth Advisors 4400 State Hwy 121, Ste. 200, Lewisville, TX 75056. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Financial planning services offered through Global Wealth Advisors are separate and unrelated to Commonwealth. He can be reached at (972) 930-1238 or at

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