ABLE Account Budget: A Comprehensive Guide

An ABLE account is a tax-advantaged savings account designed specifically for individuals with disabilities. It's a great way to save for expenses related to your disability without affecting your eligibility for government benefits.

ABLE accounts have a contribution limit of $14,000 per year, which is the same as a traditional savings account. This limit is set by the IRS.

Having an ABLE account can provide peace of mind and financial security, allowing you to plan for your future and make the most of your resources.

ABLE accounts are a valuable resource for eligible individuals with disabilities, allowing them to save funds in a tax-free environment.

These specialized accounts can be used to pay for a variety of expenses related to living with a disability, including education, housing, transportation, and more.

ABLE accounts are a crucial tool for improving the financial security and independence of people with disabilities.

The National Resource Center for Supported Decision-Making provides helpful resources and guidance for those interested in setting up an ABLE account.

To open an ABLE account, you can enroll in any state's program, even if you don't live there, as long as the program accepts out-of-state residents.

The ABLE account can be managed by the beneficiary, subject to capacity, or by their parents, conservator/guardian, or agent under a power of attorney.

You can choose from multiple state ABLE programs that offer varied investment strategies, similar to 529 college savings plans.

Some states, like Ohio, Nebraska, and Tennessee, accept out-of-state residents, while others, like Florida, only accept in-state residents.

You can change your investment choices in your ABLE account up to two times per year.

To determine which state ABLE programs are accepting out-of-state residents, you can refer to the individual state pages.

Here's a quick rundown of the key players involved in managing an ABLE account:

It's essential to understand the payback provisions of your state's plan or the plan you select, as Medicaid may seek reimbursement from the remaining balance in the ABLE account upon the beneficiary's death.

ABLE accounts are tax-advantaged savings accounts for individuals with disabilities. They can be used to cover qualified disability expenses, such as education, housing, transportation, and employment training.

An eligible individual can have only one ABLE account, and contributions to the account are allowed from any person, including individuals, trusts, estates, partnerships, associations, companies, or corporations. Contributions are subject to an annual limit, which can be found by clicking here.

The account owner is the beneficiary, and assets in the account are disregarded or given special treatment when determining eligibility for most federal means-tested benefits, including SSI benefits and Medicaid.

ABLE accounts are a relatively new addition to the world of savings accounts, but they've proven to be incredibly helpful for individuals with disabilities.

They offer a tax-advantaged account, which means you can save money without worrying about losing benefits.

ABLE account holders can use the funds for various expenses related to their disability, including medical expenses.

These accounts are designed to provide an additional means of financial stability for individuals with disabilities, allowing them to save for the future without jeopardizing their eligibility for certain benefits.

They allow for extra savings through a contribution plan, giving individuals with disabilities more control over their financial future.

To open an ABLE account, you must have a disability that began before age 26, although this is expanding to before age 46 on 1/1/2026.

There are annual contribution limits, and these limits apply to all contributors combined. You can find the current contribution limits by clicking here.

You're not obligated to enroll in your state of residence, and the account owner is considered the designated beneficiary. Another person, such as a parent or guardian, may be allowed signature authority over the account.

Funds in the account can be used for qualified disability expenses, which include education, housing, transportation, and employment training and support. These expenses also include assistive technology, personal support services, health care, and basic living expenses.

Here are some examples of qualified disability expenses:

Assets in and distributions for qualified disability expenses will be disregarded or given special treatment when determining eligibility for most federal means-tested benefits, including SSI benefits and Medicaid.

The annual contribution limit for an ABLE account is $16,000 in 2022, which is also the maximum amount that individuals can make as a gift to someone else without reporting it to the IRS.

This limit applies to all participating individuals, including family and friends.

The total contributions that can be made to an ABLE account are subject to each individual state's 529 savings account limits, which can be more than $300,000 per account.

ABLE account owners who work and don't participate in an employer-sponsored retirement plan can also contribute their compensation up to the federal poverty level, which ranges from $13,590 to $16,990 depending on the state of residence.

The first $100,000 in an ABLE account is not counted as an asset for purposes of SSI eligibility.

Any amount over $100,000 in an ABLE account can cause the individual's SSI payments to be suspended until the account balance decreases to less than $100,000.

Here's a summary of the contribution limits for an ABLE account:

Investing and managing ABLE funds can be a bit tricky, but don't worry, I've got the basics covered.

You can choose from various investment options in your ABLE account, but changes can only be made twice a year. This means you need to think carefully about your investment strategy and not make too many changes at once.

The trustee of the Special Needs Trust (SNT) has the final say in how the investments are made, but they must act in the best interest of the beneficiary.

You can roll over up to $19,000 per year from a 529 plan to an ABLE account without any penalty.

Here are some key points to keep in mind when investing and managing your ABLE funds:

It's worth noting that the ABLE account owner has immediate access to funds and can manage the account themselves, which is a big plus compared to a Special Needs Trust.

You can choose from various investment options within an ABLE account, and the specific options available will depend on the state's program you've enrolled in.

Each state's ABLE program designates investment options for account holders, and these options may be changed no more than twice annually.

The appointed trustee of an SNT has the sole discretion to make investments, acting in the best interests of the beneficiary.

Some states, like Ohio, Nebraska, and Tennessee, offer ABLE programs that allow out-of-state residents to enroll.

You can change your investment choices in your ABLE account up to two times per year.

It's essential to align your investment choice with when and how you plan to use the funds in the ABLE account and your risk tolerance.

Here are some examples of states that offer ABLE programs accepting nationwide enrollment:

ABLE account fees are generally nominal, limited to maintenance and charges by financial institutions.

Attorney and trustee fees can be incurred when creating and maintaining a Special Needs Trust (SNT).

A less expensive alternative to a traditional SNT is a pooled SNT, which may be a good option in some cases.

Pooled SNTs are administered by nonprofit organizations and can combine the resources of many sub-accounts for efficiency and investment effectiveness.

You can roll over up to $19,000 per year from a 529 to an ABLE account with no penalty. This can be a great way to transfer funds from a college savings plan to a disability savings plan, potentially reducing your tax burden in the process.

Rolling over funds from a 529 plan to an ABLE account can also provide more flexibility in how you use the funds. For example, you can use the funds in an ABLE account to pay for qualified disability expenses, such as medical expenses, education, and housing.

One of the biggest advantages of ABLE accounts is their flexibility. ABLE account owners have immediate access to funds, which can be a game-changer for individuals with disabilities.

This means that if your child needs a new wheelchair or has an unexpected medical expense, you can tap into the ABLE account to cover it right away. The funds are available when you need them, without having to go through a lengthy process.

Unlike a Special Needs Trust, the account can be established, managed, and owned by the individual with a disability, giving them more control over their own financial resources. This can be a huge confidence booster and help them feel more independent.

This flexibility also allows you to make changes to the account as needed, without having to worry about complex trust documents or court approvals.