What Is an ABLE Account?

ABLE accounts allow individuals with disabilities to save money using a tax-advantaged account. Congress created these accounts under the 2014 Achieving a Better Life Experience (ABLE) Act. The law aims to simplify how individuals with disabilities cover qualified expenses. In 2026, expanded eligibility rules allow more people to open ABLE accounts, and the standard annual contribution limit has increased to $20,000. ¹ Before opening an ABLE account, take time to understand how they work and who qualifies.

You can also work with a financial advisor as you develop a financial strategy for your family. Find an advisor who serves your area.

What Is an ABLE Account?

An ABLE account is a tax-advantaged savings program for eligible people with disabilities, known as designated beneficiaries. Money saved in an ABLE account can be used by a designated beneficiary to help pay for qualified disability expenses. Withdrawals are tax-free when used for qualified expenses, similar to the way funds in a 529 plan can be withdrawn tax-free when used for higher education.

The Tax Cuts and Jobs Act of 2017 expanded some of the provisions of the original ABLE Act. That included:

• Allowing eligible working beneficiaries to contribute additional money above the standard annual limit
• Allowing the designated beneficiary of an ABLE account to claim the saver’s credit for their contributions
• Permitting rollovers from a 529 qualified tuition program to an ABLE account when the designated beneficiary of both accounts is the same person or a qualifying family member

These provisions became permanent beginning in 2026. ²

ABLE accounts don’t function as retirement savings accounts. Instead, ABLE accounts help make the financial burden of paying for disability-related expenses easier to bear while offering some tax benefits to savers.

How an ABLE Account Works

An ABLE account works by allowing a designated beneficiary to save money for disability expenses on a tax-advantaged basis. Each designated beneficiary may open one ABLE account, but anyone may contribute to the account on behalf of the beneficiary. For 2026, the standard annual contribution limit is $20,000 per ABLE account, regardless of how many people contribute. Again, this is largely similar to the way a 529 plan works.

Account earnings grow tax-deferred. Withdrawals are tax-free when used for qualified disability expenses. This includes costs related to:

• Education
• Housing
• Transportation
• Employment training and support
• Health, prevention and wellness
• Assistive technology and related services
• Financial management services
• Legal fees
• Everyday living expenses

An ABLE account can also be used to pay for funeral and burial expenses after the designated beneficiary passes away. Rollovers to an ABLE account from a 529 plan are allowed on behalf of a designated beneficiary or qualifying family member. The rollover amount is limited to the remaining annual ABLE contribution allowance, which is generally $20,000 in 2026 before accounting for other contributions made during the year.

Who Qualifies for an ABLE Account?

ABLE accounts have one designated beneficiary who owns the account. In order to own an ABLE account, one of the following must be true:

• You’re eligible for Supplemental Security Income (SSI) due to a disability or blindness that began before age 46
• You’re eligible to receive disability insurance benefits, childhood disability benefits or disabled widow’s or widower’s benefits based on disability or blindness that began before age 46
• You’ve certified or had an authorized person certify that you met the criteria for a qualifying disability or blindness that began before age 46

Parents can establish ABLE accounts on behalf of disabled children, or adults can do so for themselves. Any distributions from the account are intended to be used only for the benefit of the designated beneficiary. If the designated beneficiary is unable to make withdrawals on their own behalf or is a minor, someone with signature authority (i.e., a parent or guardian) can assume control of the account for them.

Tax Benefits and Contribution Limits of ABLE Accounts

The main tax benefit associated with ABLE accounts is the ability to withdraw money on a tax-free basis when that money is used for qualified disability expenses. You can, however, run into tax trouble if you use money in the account for a non-qualified expense. The IRS can assess income tax on any earnings withdrawn and apply a 10% withdrawal penalty on the taxable earnings portion, unless an exception applies.

In terms of contributions, the annual contribution limit follows the annual gift tax exclusion limit. Again, the 2026 standard limit is $20,000 in total contributions per beneficiary, not $20,000 from each contributor. ABLE account owners who are working may be able to contribute additional funds above this limit. Additional contributions are capped at the lower of the federal poverty level for one person or the beneficiary’s eligible compensation for the year. For 2026, the additional limit is $15,650 in the contiguous states and Washington, D.C., $17,990 in Hawaii and $19,550 in Alaska. ³ The additional contribution is generally unavailable if certain employer retirement plan contributions are made for the beneficiary during the year.

It’s important to note that ABLE account balances generally don’t affect a beneficiary’s eligibility for SSI, Medicaid or other public benefit programs, up to a certain limit. For SSI, the first $100,000 in an eligible ABLE account is excluded from countable resources. If the amount above $100,000 causes the beneficiary to exceed the SSI resource limit, SSI cash benefits may be suspended until countable resources fall sufficiently. Medicaid eligibility generally continues during a suspension caused solely by excess ABLE account resources. Other public benefit programs may apply different rules.

How to Open an ABLE Account

Opening an ABLE account online may require little or no initial deposit, depending on the program. States offer ABLE programs individually or through partnerships, and you can generally choose a program that accepts residents of your state. You can choose the plan that looks most attractive to you.

When opening an ABLE account, consider the investment options offered, which may include mutual funds and exchange-traded funds (ETFs). The range of investment options can vary from plan to plan. Also, look at whether any tax deduction may be available for contributions.

Some states offer tax deductions or credits for ABLE contributions, while others do not. There’s no federal tax deduction for contributions. In addition to investment options, take the fees you might pay into account. Mutual funds and ETFs charge expense ratios, which reflect the annual cost of ownership. The higher these fees are, the more they can detract from your investment returns.

How an ABLE Account Can Protect SSI Benefits

For someone receiving Supplemental Security Income, the effect of an ABLE account on benefit eligibility may be as important as its tax advantages. SSI generally limits countable resources to $2,000 for an individual and $3,000 for an eligible couple. Money held in a qualifying ABLE account receives special treatment under those limits. ⁴

Consider an individual receiving SSI who has $1,500 in a regular savings account and $25,000 in an ABLE account. Assuming there are no other countable resources, the calculation would look like this:

Because the ABLE balance is below $100,000, none of it counts toward the individual’s SSI resource limit. The $1,500 in regular savings remains below the $2,000 individual limit. Assuming all other eligibility requirements are satisfied, these balances alone would not cause the person to lose SSI eligibility.

There are important exceptions to consider when withdrawing money. For example, an ABLE withdrawal intended for housing expenses may become a countable resource if it is retained beyond the month of receipt rather than spent under the applicable SSI rules. Withdrawals for other qualified disability expenses can receive different resource treatment.

The timing and purpose of withdrawals therefore matter, particularly for beneficiaries who rely on SSI. Before moving substantial amounts into or out of an ABLE account, review how the transaction could affect countable resources and benefit eligibility.

Bottom Line

Understanding ABLE accounts and how they work is important if you have a disability or a disabled family member. ABLE accounts help cover qualified expenses and allow disabled individuals to receive benefits or work, if able. That can be invaluable for managing the cost of care over a lifetime.

Financial Planning Tips

• Consider talking to a financial advisor about whether an ABLE account might be something you need, either for yourself or a disabled family member. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area,  and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you have a disabled dependent, you may also consider establishing a special needs trust on their behalf. A special needs trust is designed to hold money and other assets that are to be used to pay for the care of a special needs dependent. Setting up this type of trust can also allow a disabled dependent to remain eligible for SSI benefits, Medicaid and other government benefit programs.

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