20 Apr 2026
If you are covering disability-related expenses, you may want to consider opening an Achieving a Better Life Experience account.
ABLE accounts are tax-advantaged savings and investment accounts designed to help individuals with disabilities save for qualified expenses without affecting their eligibility for public benefits programs such as Supplemental Security Income and Medicaid.
Qualified expenses for ABLE accounts
Funds in an ABLE account can be used for a variety of expenses, including education, housing, transportation, employment training and support, assistive technology, and financial management and administrative services.
The purpose of these accounts is to help reduce financial pressure on individuals with disabilities by supplementing — rather than replacing — benefits provided by private insurance, Medicaid, SSI, employment and other sources.
Contribution limits and additional allowances
The annual contribution limit for an ABLE account is $19,000. Certain employed beneficiaries may be able to make additional contributions.
For residents of the continental United States, this extra contribution can reach $15,650. In Alaska, it is $19,550, and in Hawaii, it is $17,990.
Saver’s Credit eligibility
ABLE account beneficiaries may be eligible to claim the Saver’s Credit, which is a nonrefundable credit based on a percentage of contributions, if they meet certain criteria.
Eligible individuals must be at least 18 years old at the close of the taxable year, cannot be claimed as a dependent and cannot be a full-time student. Beneficiaries can claim the credit by using Form 8880, Credit for Qualified Retirement Savings Contributions.
Additionally, another person, such as a parent, guardian or someone with power of attorney, may have signature authority over the account.
Flexible provisions and rollovers
Families have the option to roll over funds from a 529 plan to another family member’s ABLE account.
The ABLE account must be for the same beneficiary as the 529 plan holder. Rollovers from a Section 529 plan count toward the annual contribution limit, and the total of the rollover plus any additional contributions cannot exceed the yearly limit.
For example, if you contribute $10,000 to your child’s ABLE account and roll over $9,000 from a 529 plan, you will have reached the maximum contribution for the year.
State ABLE programs and tax benefits
States may offer ABLE accounts to assist individuals who become disabled before the age of 26 or whose families pay for disability-related expenses as outlined in Publication 907, Tax Highlights for Persons with Disabilities.
While contributions are not deductible for federal tax purposes, distributions from the account, including earnings, are tax free for the beneficiary when they are used for qualified disability expenses.
© 2026
Tags: Tax