Expansion of ABLE Account Eligibility
Starting from January 1, 2026, around 6.1 million more Americans will gain the opportunity to open and contribute to an Achieving a Better Life Experience (ABLE) account, as reported by the National Institute on Disabilities.
These accounts, created by Congress in 2014, provide tax benefits and are aimed at Americans with disabilities. They allow individuals to save for important expenses like education, housing, and healthcare without jeopardizing their Medicaid or Social Security income eligibility.
Previously, individuals had to have a qualifying medical condition diagnosed before turning 26, but this age limit has now been extended to 46 starting in January. This change is expected to increase the total eligible Americans for ABLE accounts to around 14 million.
Julianna Crist, who oversees ABLE programs at Bestwell, a financial technology company managing multiple ABLE plans, described these accounts as “powerful estate planning, financial and tax planning tools.” She likened them to a “super-powerful Roth-like” individual retirement account.
Similar to a Roth IRA, contributions are made with post-tax dollars. The funds can then grow without being taxed, and qualified withdrawals also don’t incur income tax. The flexibility with ABLE accounts is noteworthy; beneficiaries can access their funds whenever they need them and deposit more money each year without waiting to reach a certain age.
Withdrawals for qualified expenses from an ABLE account are tax-free, while non-qualified withdrawals face income tax and a 10% penalty. Account holders can save up to $100,000 without risking their access to additional security income and Medicaid benefits. In contrast, having more than $2,000 in savings elsewhere could jeopardize these benefits.
Who Can Get an ABLE Account?
ABLE accounts are intended for U.S. citizens across all 50 states who either receive Supplemental Security Income or Social Security Disability Insurance, or who can attest to having a qualifying medical condition. Crist mentions that more individuals may qualify than initially believed. Many may not think they have a disability even if they have a qualifying condition.
To self-certify, a written medical certificate confirming the qualification, signed by an appropriate physician, is needed, noting that the condition started before the individual turned 46. Qualifying conditions range from blindness, as defined by the Social Security Administration, to various physical and mental health issues, including autism spectrum disorder and ADHD.
Beneficiaries can contribute up to $20,000 to their ABLE accounts beginning in 2026. Additionally, those who are employed but do not contribute to a workplace retirement plan can contribute further, matching their income or the poverty threshold, whichever is lower. This threshold is set at $15,650 for 2026, slightly higher at $19,550 for residents of Alaska and $17,990 for Hawaii.
Anyone can contribute to someone else’s ABLE account, whether it’s parents, family members, or even employers, but contributions can’t exceed the annual cap.
Picking the Right ABLE Account
Most states and Washington, D.C., offer ABLE accounts, with many permitting participation from out-of-state residents. According to the Able National Resource Center, only a few states, like Idaho and South Dakota, don’t have their own plans. Depending on your location and finances, it might be wise to explore accounts in different states, possibly with the aid of a financial advisor.
If you’re thinking about creating an ABLE account, Crist suggests starting with your state’s plan, if available, since some states provide state income tax deductions for contributions. Plus, if you have questions, it can sometimes be easier to connect with someone local.
After looking at state plans, comparing investment choices and costs becomes important. Crist notes that ABLE accounts usually have an annual administration fee of about $30, along with potential fees equaling 0.1% to 0.3% of the account’s assets. Different plans also vary in the investment options available, which can influence your decision.
Some states offer a broader range of investment options, while others might have only a limited selection, catering to various types of investors. And if you want a debit card linked to your account, know that not all plans provide that option.
