Beginning in 2026, more individuals with disabilities will be eligible to open tax‑advantaged ABLE accounts. These accounts, similar to Section 529 college savings plans, allow families and individuals to save for qualified disability expenses while enjoying tax benefits. The SECURE 2.0 Act, signed into law in 2022, expanded eligibility rules, and the One Big Beautiful Bill Act (OBBBA), signed in 2025, made several enhancements permanent.
ABLE accounts can be opened by eligible individuals, family members, or guardians, and anyone may contribute. Contributions made by the beneficiary can qualify for the saver’s credit, which remains capped at $1,000 for 2025 and 2026. While contributions are not tax‑deductible, funds grow tax‑deferred and distributions used for qualified expenses are tax‑free. Nonqualified withdrawals, however, are subject to income tax and a 10% penalty.
These accounts generally do not affect eligibility for government benefits such as Social Security Disability Insurance (SSDI) or Medicaid. However, balances above $100,000 count toward Supplemental Security Income (SSI) resource limits, which may temporarily suspend SSI benefits until balances fall below the threshold. Housing expense distributions also count toward SSI income limits.
Eligibility rules are expanding. Previously, individuals had to become disabled before age 26 to qualify. Starting January 1, 2026, the age limit increases to 46, opening the door for many more people. Eligibility is based on entitlement to SSI or SSDI benefits, or by filing a disability certificate with the IRS.
Funds from ABLE accounts can be used for a wide range of qualified expenses that improve health, independence, and quality of life. These include education, housing, transportation, healthcare, assistive technology, personal support services, and employment support.
Accounts are established under state programs, and participants may choose programs outside their state of residence if permitted. Investment options vary, and account holders may adjust investment directions twice per year. Each eligible individual may have only one ABLE account, with annual contribution limits set at $19,000 for 2025 and $20,000 for 2026. Rollovers from 529 plans are allowed without penalty, provided the ABLE account beneficiary is the same or a family member of the 529 plan beneficiary. These rollovers count toward the annual limit.
Working beneficiaries may also contribute part or all of their income, subject to limits based on the federal poverty line for a one‑person household.
For individuals who became disabled or blind after age 26 but before age 46, the expanded eligibility beginning in 2026 offers a new opportunity to save in a tax‑advantaged way. Families and individuals should explore ABLE accounts to take advantage of these benefits and plan for future financial security.
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