ABLE Accounts Offer Financial Independence

People with disabilities, and their families, can save for a variety of expenses in these tax-advantaged accounts.

- EMMA PATCH

IN 2014, FEDERAL LEGISLATION paved the way for states to offer ABLE accounts—tax­ advantaged plans that allow individuals with disabilities to save for ongoing ex­penses without threatening their eligibility for crucial government support, such as Supplemental Security Income or Social Security Disability Insurance. Previ­ously, people with disabili­ ties had to have less than $2,000 in total assets to maintain their eligibility for such programs, which made it difficult for them to live independently.

As is the case with 529 college­savings accounts, ABLE accounts (the acro­ nym stands for Achieving a Better Life Experience) grow tax­free, and the earn­ ings aren’t taxed as long as the money goes toward qualified disability expenses. The maximum annual contribution to an ABLE account rose to $16,000 on January 1. The limit, which is tied to the IRS’s gift tax exclusion, had been capped at $15,000 since 2018.