Frequently Asked Questions - ABLE National Resource Center (2024)

What is the background of the ABLE Act?

The Achieving a Better Life Experience (ABLE) Act, passed on December 19, 2014, allows for the establishment of savings/investment accounts for people with disabilities. The Internal Revenue Service (IRS) designed ABLE accounts with some of the rules for 529 Qualified Tuition Plans. Funds in ABLE accounts are not considered when determining eligibility for federally funded means-tested benefits such as Supplemental Security Income (SSI) and Medicaid. The funds saved in an ABLE account may supplement, but do not replace, benefits provided through private insurance, Medicaid, SSI, the beneficiary’s employment or other sources. ABLE investment growth is tax-free and does not count as income when used to pay for qualified disability expenses (QDEs). For more information on this topic, please visit History of the ABLE Act and Federal Guidance.

Why the need for an ABLE account?

Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care, food and housing assistance. Many of these benefits require meeting a means test that excludes the eligibility of individuals with more than $2,000 in liquid assets/resources such as cash savings, money in a checking or savings accounts and some retirement funds. The ABLE Act recognizes the extra and significant costs of living with a disability. ABLE accounts allow eligible people the opportunity to save and pay for qualified disability expenses. Supplemental Security Income beneficiaries may save and invest up to $100,000 in an ABLE account, which does not count towards the SSI resource limit. Medicaid and many other public benefit programs (HUD, FAFSA, SNAP) do not count any amount of ABLE funds as a countable resource. Reference ABLE Federal Guidance for more information.

Do I have to wait for my state to establish a program before opening an account?

No. A person can open an account in any state that allows people from other states to open an account, regardless of if their own state has an ABLE plan. Please use the ABLE NRC Comparison Tools to find an ABLE plan that will work for you.

How has ABLE changed since the ABLE Act was passed into law?

Can the ABLE National Resource Center open an ABLE account for me?

Can I own more than one 529 ABLE account?

No, a person can only have one ABLE account. Reference the plan disclosure documents for details on how to change ABLE plans if you want a different one. The process may vary slightly depending upon the state plan. Some plans charge a nominal fee. The process usually involves filling out a form and providing it to the state plan representative. Typically, the old account must be closed within 60 days.

How can an ABLE account help me pay my housing expenses without a reduction in my Supplemental Security Income (SSI) payment?

Does the Free Application for Federal Student Aid (FAFSA) count an ABLE account as a resource when they consider my financial situation and need for student aid?

No. The FAFSA application instructions specify that 529 ABLE account savings and investments are excluded as a resource. For more information, visit the FAFSA website.

What happens to the ABLE account after the death of the account owner?

When the account owner passes away, the funds in the ABLE account can be used for outstanding qualified disability expenses (QDE), including funeral and burial expenses. The ABLE plan can advise you on what information is needed such as a special form, a death certificate or a document appointing the executor or administrator of the deceased account owner’s estate. Medicaid may request reimbursem*nt for Medicaid expenses paid since the ABLE account was opened. This practice is sometimes called Medicaid claw back or Medicaid payback. ABLE account owners who did not use Medicaid are not subject to Medicaid payback. Any premiums the person paid for a Medicaid Buy in Program are deducted from the payback balance. Some states do not support Medicaid payback. ABLE plans’ Medicaid payback policies are listed within the ABLE Plan Comparison Tools. The ABLE account owner may appoint a successor designated beneficiary to inherit the ABLE account assets upon their death. Transfer to the successor designated beneficiary or rollover into their ABLE account is made after the payment of outstanding QDEs, reimbursem*nt of state Medicaid claims and estate taxes. When no successor designated beneficiary is named, any remaining funds are payable to the estate and will be distributed according to the last will and testament.

Do I have to pay taxes on the money in my ABLE account?

Money contributed into the ABLE account has already been taxed. ABLE investment growth is not taxed when the funds are used for qualified disability expenses. After death of the account owner, the account is subject to the federal estate taxes.

Who is eligible to open an ABLE account?

A person who has a disability that began before age 26* may open an ABLE account at any age. In addition to age of onset of disability, the person needs to meet the severity of disability requirement in one of two ways: 1) receiving SSI or SSDI (Social Security Disability Insurance) or 2) possessing signed documentation by a licensed physician stating that the individual's disability meets the "marked and severe" functional limitations standard stated in the ABLE statute. It does not matter if the person is working or can work. A person who has not received SSI or SSDI since before age 26 could ask their doctor to sign a Disability Certification indicating that the disability began before age 26. Alternatively, SSA maintains a list of “compassionate allowance conditions” which are so severe that they are deemed to meet the requirements without a physician’s diagnosis provided the condition was present before age 26. Each qualified ABLE program determines what is needed to establish eligibility to open an ABLE account. *Changing to age 46 effective January 1, 2026.

Who Can Open and Manage the ABLE Account?

An adult who has the legal capacity to contract may open their own ABLE account or may designate someone to open and manage the account for them. If the eligible individual (whether a minor or adult) is unable to open an ABLE account, federal law limits who can serve as the “authorized individual.” In some plans, the authorized individual is referred to as the “authorized legal representative.” In that case, it may be opened in this order of priority: agent under a power of attorney; conservator or legal guardian; spouse; parent; sibling; grandparent; or representative payee (RP) appointed by the Social Security Administration (SSA). A representative payee, who is appointed by SSA, must meet all SSA ABLE account rules regarding access to benefits. Some plans also permit the designation of an “interested party.” This is revocable permission granted by the account owner or authorized individual, allows one or more interested parties to receive duplicate statements and to access information on the account. The interested party may not make changes to the account or request transactions. Please explore Federal guidance to learn more.

If I am over the age of 26, can I still open an ABLE account?

Yes, an ABLE account can be opened for a person with a disability at any age. Even though you may be over the age of 26, if your disability began before age 26 and you meet the medical criteria, you are eligible. If you are not receiving a disability-based benefit from the Social Security Administration, ask your physician to indicate if you meet or equal the disability criteria by signing a Disability Certification.

Does the Social Security Administration onset of disability date determine whether or not my disability started before the age of 26 and whether or not I can open an ABLE account?

Not exactly. SSA staff are not responsible for determining when the disability began for an ABLE account. Their onset of disability date may be after a person’s disability began because they must consider other non-disability factors in deciding the date. If the Social Security Administration determines that your disability began before age 26, and awards you a disability-based benefit, you can immediately open an ABLE account.If disability began before age 26, but SSA established a date after age 26, ask your physician to sign a disability certification stating that your disability began before age 26 and that you meet the SSA definition and criteria regarding significant functional limitations. Access the Sample Disability Certification.

My disability began after age 26, but before age 46. What can I do to prepare to open an ABLE account on January 1, 2026 when the ABLE Age Adjustment Act Expands ABLE eligibility?

If you receive SSI and/or SSDI, you may want to explore employment options and what other protected savings options the Social Security Administration offers for those who work. A person could complete their education, start a job and access free benefits advisem*nt and work supports that can help them pay for items needed for work. Then when the ABLE account is opened, it can be used for tax-free, long-term savings and investment. Explore ABLE Accounts and Working People With Disabilities and Ready and ABLE to Work and Save.If you do not receive a disability-based benefit from the Social Security Administration, several months before opening your ABLE account ask your physician to indicate if you meet or equal the disability criteria by signing a Disability Certification.You can explore the different ABLE plans available in the State Plan Search to determine which plan would benefit you the most.

Can an ABLE account owner work and have an ABLE account?

Yes, absolutely! Many people who have a disability can and do work and some do not receive a benefit from Social Security. Working or earning substantial gainful activity (SGA) is not a factor in determining whether someone is eligible for an ABLE account.

What is the medical criteria for opening an ABLE account when someone is not receiving a disability-based benefit from Social Security?

Which types of disabilities qualify someone for an ABLE account?

What happens if the account owner medically improves and is no longer eligible for an ABLE account?

If a beneficiary is no longer eligible, they continue to own the account they already opened and can continue to make deposits into the ABLE account until the end of the calendar year. After the end of the year, they stop being eligible, no new contributions are permitted and account withdrawals will be treated as unqualified withdrawals. Distributions from an ABLE account during a period when an individual is no longer an eligible individual may be subject to taxation. The ABLE investment earnings portion of a distribution may be taxable.

Does an SSI beneficiary continue to be eligible for an ABLE account if they have a Social Security Administration age 18 redetermination and are found to not meet the adult definition of disability?

It depends. SSA has two definitions for disability: one for a child under the age of 18 and another work-based definition for an adult age 18 and over. The ABLE regulations use the language in the SSA childhood definition of disability for ABLE eligibility. If SSI payments terminate because the person does not meet the adult definition of disability, the young adult may continue to be eligible for an ABLE account if their medical doctor completes a disability certification stating that they continue to meet the childhood definition of disability. Here is how it works: When an SSI beneficiary reaches age 18, SSA conducts a review, called a redetermination, to see if the person meets the different medical criteria under the adult definition of disability, which also measures impairments against the ability to work at a specific level. In addition, SSI looks at non-medical rules such as the person’s income, countable resources and living arrangements. If the person is determined eligible, SSI payments continue. If they do not, SSI payments terminate. Note: While the person is participating in an approved special education, a vocational rehabilitation program or employment service program, there may be other options for SSI payments and Medicaid to continue under a SSA incentive called Section 301. Section 301 participation can provide stability for SSI recipients turning 18 as they continue high school or college, job training, apprenticeship or employment as written within the approved Individual Education or Work Plan. It is important that SSA be informed that the youth has been enrolled and is actively participating in a program before the redetermination is conducted. This may help the person to continue to receive SSI payments until the program ends or until the time it no longer increases the likelihood that the youth will not return to the disability rolls. Visit the Youth Transition Toolkit webpage to learn more.

How do I open an ABLE account?

Can I open an ABLE account in any state?

Can I open an ABLE account at my local bank?

At this time, residents of Maine may open an ABLE account at a Bank of Bangor branch. The other ABLE plans have a website where an ABLE account can be opened online. Some state plans allow for a paper application to be mailed, as requested.

Where can I find specific details on fees, investment choices and performance or other options offered by an ABLE program?

You can find this information in each state program’s plan disclosure document. This document describes the fees and charges, risks, benefits and investment products offered by the state ABLE program. Investments may range from conservative to moderate to aggressive options. You can choose to invest your contributions in one or more options or in multiple options. Or you can choose not to enroll in investment options and select the savings or checking account options only. Products may include high yield savings options, mutual funds and exchange traded funds. Many offer savings in checking accounts and debit cards. The issuer uses the program disclosure booklet as the offering document for the ABLE program. Select a State Map contains links to the disclosure documents for each plan.

Who can contribute to an ABLE account?

The ABLE Act allows any “person” to contribute to an ABLE account. The Internal Revenue Service defines a “person” as an “individual, corporation, partnership, trust or estate, joint stock company, association, syndicate…guardian…” A special needs trust is also a “person” (IRC 7701(a)(1), Reg. 301.7701-1(a)) and a pooled trust is a “person” who may contribute to an ABLE account. The ABLE Act allows contributions by the ABLE account owner and a third party (family, friends, co-workers, etc.). Learn more at  Strategies for Funding an ABLE Account.

Are there limits to how much money can be put into an ABLE account?

Can an ABLE account reduce countable income?

No, ABLE accounts do not reduce countable earnings. An ABLE account owner is still subject to income limits of public benefits programs. Earnings affect benefits the same as they always have, even when they are directly deposited into an ABLE account. ABLE accounts are a tool to save and invest money. An ABLE account is a protected savings opportunity that can help a person maintain eligibility for means-tested public benefits such as SSI and Medicaid.

How are contributions deposited into an ABLE account?

What can funds in an ABLE account be used for?

Is food a qualified disability expense?

Is the purchase of a vehicle or other transportation a qualified disability expense?

Vehicle purchase, vehicle modification, titling, registration, repairs and insurance are qualified disability expenses for the ABLE account owner who uses the vehicle for transportation or who is transported in the vehicle. When the vehicle is owned by the ABLE account owner, payments towards the purchase, including a payment of the remaining balance of the loan after the account owner’s death, would be a QDE. Alternative Finance Programs help people find grants that may for the modification of a vehicle. The programs also offer loans for the purchase of a vehicle that is modified or will be modified, with favorable lending terms. For example, the interest may be 0% to 8%, and a loan may be a credit building opportunity. Alternative Finance Programs can help people save money when they need assistive technology, also helping to preserve their ABLE funds. Transportation expenses for UBER, LYFT, a taxi, bus or train services are also qualified disability expenses. Vehicle and transportation expenses paid from the ABLE account could supplement but should not replace benefits provided by other programs that may pay for transportation expenses.

Are housing or housing-related expenses a qualified disability expense?

Yes, housing expenses and housing-related expenses are QDEs. They include a down payment, mortgage, rent, real property taxes, heat, fuel, gas, electric, water, sewer and garbage services. The distribution from the ABLE account and the payment for these expenses must occur within the same month. If the distribution for any of these expenses is retained into the following month or months, it is counted as part of resources by the Supplemental Security Income benefits program and means-tested benefit programs. HOA (homeowner associations) and condominium fees which are broken down to include any of these expenses could also impact resources when held over into a future month.Note: This list of housing related QDEs is not exhaustive and includes only those identified by SSA which can impact resources when retained into a future month.Please explore the Home Ownership Guide and Home Inheritance Guide for additional information about the power of ABLE accounts in supporting housing needs.

 How can an ABLE account help me pay my housing expenses without a reduction in my Supplemental Security Income (SSI) payment?

The Social Security Administration counts housing costs that someone else provides or pays for as “unearned income.” This can reduce a person’s SSI payment by as much as one-third. Contributions deposited directly into an ABLE account by friends, family, a 529 college savings account or a trust can help pay for housing and related expenses without it counting against the SSI monthly payment or other means-tested benefits. The following expenses are the housing and related expenses identified in the SSA POMS (Program Operations Manual System): Mortgage payments, including property taxes required by the mortgage holder, real property taxes, rent, heating fuel, gas, electric, water, sewer and garbage removal. Best practices: (1) Third party contributions by a special needs trust, parent or relative should be made directly into the ABLE account. Do not give this money directly to the ABLE account owner; (2) Set up automatic bill payments on predetermined dates to pay for recurring expenses. It is not appropriate for a parent to pay housing expenses directly and then reimburse themselves from the ABLE account; (3) When withdrawals are made for housing and related expenses, the withdrawal needs to be used to pay for the housing expense within the same month. Otherwise, it is counted as a resource that may impact benefits. See Determining if Something is a Qualified Disability Expense and ABLE and SSI / SSDI Benefits to learn more.

Is the repayment of a SSA overpayment a qualified disability expense?

Yes. The repayment of SSI and SSDI overpayments would fall under the category of “financial management” and are QDEs.

Can I have an ABLE account and a Special Needs Trust?

Yes, you can have both and can use your ABLE account with other types of trusts and accounts. Determining which option is the most appropriate will depend upon individual circ*mstances. For many people, it may make sense to have both an ABLE account and a special needs trust. The ABLE National Resource Center partnered with the Special Needs Alliance to prepare a comparison chart of ABLE Accounts and Special Needs and Pooled Trusts  and other information to help people choose the options that best meet their needs.

Can a 529 qualified tuition program (QTP) account be rolled over into a 529A ABLE account?

Yes, rollovers may be made from a 529 QTP account to a section 529A ABLE account if the owner of the ABLE account is the beneficiary of the tuition account or is an eligible member of the family. The amount rolled over is limited to the annual contribution limit of $18,000 (2024) for all combined contributions to the 529 ABLE account.As an example, if there is $34,000 in the 529 QTP, and the entire amount will be rolled over into a 529A, contributions will need to be made over a few years due to the annual contribution limits for ABLE accounts. ABLE account owners who work and do not have deposits made to a retirement plan in the calendar year may deposit more into their ABLE account under the ABLE to Work Act.Learn more: There are no tax consequences if you change the designated beneficiary of the 529 QTP account to another member of the beneficiary’s family and it is rolled over into the ABLE account (or another QTP) within 60 days after the date of the distribution. There is an expanded list for members of the beneficiary’s family identified in 2023 Publication 970 (irs.gov).Several provisions of the Tax Cuts and Jobs Act including the 529 Qualified Tuition Plans (QTP) rollover provision is due to sunset January 1, 2026. Therefore, now may be a suitable time to begin the process of rolling over 529 QTP funds / college savings funds into an ABLE account if it is not certain that a youth will make use of the 529 QTP funds for education. Keep in mind, ABLE funds may be used to pay for education in addition to qualified disability expenses like food, housing and transportation. For ABLE, the education expense is not limited to college. It can include taking a certificate course, adult education class, professional development training session or other type of education event. An ABLE account, therefore, offers flexibility that may better meet the needs of a person who has a disability.

Can someone be selected to take ownership of the ABLE account once the account owner passes away?

Yes, this person is called a “successor account owner” and would take ownership of the original account after the original account owner passes away. To designate a successor account owner, contact your ABLE plan and ask if they have a form to complete. It must be completed before death and will take effect after death.The successor account owner must meet certain criteria of the ABLE plan as noted in the plan disclosure booklet posted within the comparison tools. These may include: The successor account owner must qualify as an ABLE-eligible individual as of the date of the designation and upon the death of the primary account owner. The successor must be a sibling, a stepsibling or a half-sibling of the account owner, whether related by blood or by adoption. Only one successor account owner per account may be designated; and the successor account owner must be a U.S. citizen or resident alien.After the ABLE plan pays for any outstanding qualified disability expenses of the deceased account owner, including funeral and burial expenses, and after Medicaid payback or expiration of the state Medicaid statute of limitations, any remaining ABLE funds are then distributed to the named beneficiary. ABLE plans are under no obligation to determine if Medicaid claims could be filed by multiple states. As a promising practice, an ABLE account owner, who is nearing the end of life, may wish to rollover or use a program-to-program transfer of funds. The rollover must be made to an eligible individual who meets criteria. State ABLE plans may differ in how they administer their program but, when possible, program-to-program transfers are recommended so that the receiving program has all information on contributions and accumulated earnings, which will prevent the funds from being counted as income.An ABLE account balance that is transferred or rolled over to a new ABLE plan does not count towards the annual contribution limit; the full balance may be moved. Only one rollover or transfer may be made every 12 months.

What changes occur with an ABLE account when an account owner who is a minor reaches the age of legal adulthood?

At age 18 (or up to 21 in some states), individuals reach the age of legal adulthood which is called the “age of majority” and can open their own ABLE account without a legal guardian. If there is no legal guardian, conservator or someone with power of attorney, a parent, a spouse, parent, sibling, grandparent or representative payee, in that order.The account owner can designate a family member, friend or someone within their circle of support to help them to manage the account, though it is not required. If the account was opened when the owner was a child, control may legally transfer to them upon reaching legal adulthood and having capacity. Contact your ABLE plan to prepare for any changes. Discussions that include guided support and supported decision making, along with opportunities to learn basic money and benefit management skills, will be helpful during this transition. There is more information about how to manage an ABLE account that may be helpful, too.

How can a state agency or other provider that serves as a Social Security Administration representative payee or guardian prepare youth for managing their benefits and money so they may not need a representative payee or guardianship when they attain the age of majority?

Before a young adult reaches the age of majority (usually 18), their representative payee or guardian should prepare them with financial education. This includes opportunities to spend and save money. The ABLE National Resource Center posts financial education materials that include links to financial service providers, games, tools and educational webinars and podcasts to help support people in learning the skills of money management.The Decision Guide, Managing Your ABLE Account , shares information about the skills needed to manage an ABLE account. Resources on building financial knowledge, how to establish a circle of support and how to save and invest are also provided. As part of this education process, an RP or guardian may choose to begin by giving the young adult small sums of money and gradually increase it, assigning certain bills to pay.Some ABLE plans offer debit cards with spending restrictions. For example, a limit of up to $30 may be set for eating at a restaurant when paying with an ABLE debit card. If financially feasible, the RP or guardian may decide to directly deposit benefit funds in a checking account and use the ABLE account for qualified disability expenses beyond basic monthly expenses. It is suggested that the RP/guardian contact the state ABLE plan to discuss what procedure the plan uses for the young adult to assume control of the ABLE account when the person reaches the age of majority, or what the process is to make a change in the representative payee.In addition, it is recommended that the RP/guardian and the youth meet with SSA for the age 18 redetermination to see if the young adult can become their own payee. If eligible, the RP should remove themselves from the ABLE account unless the youth wants them to remain. If the RP fails to remove themselves from the ABLE account, the young adult can remove them. Communication with SSA and planning for who has control of the funds may eliminate the need to return benefits in the ABLE account that would later be reissued by SSA. Advocate for keeping all funds in the ABLE account when there is a change of a RP.SSA always determines on a case-by-case basis if any conserved benefit funds in the ABLE account are returned to SSA for reissuance when there is a change of an RP. Removing benefit funds from an ABLE account and returning them to SSA is considered a qualified disability expense. Advocates and members of the youth’s circle of support can help youth request that their local SSA representative allow the ABLE funds to remain deposited in their ABLE account. This helps the young adult avoid having excess resources when SSA reissues funds. There is an annual limit on how much can be deposited into an ABLE account. If funds exceed this limit, it could result in excess resources and impact SSI eligibility. To remain eligible, the youth may need to spend those extra funds promptly.