The ABLE Act Will Help People with Disabilities Build More Assets

January 1, 2015

The Achieving a Better Life Experience (ABLE) Act was recently passed by the U.S. Congress and signed by President Obama. Under the new law, a person with a disability and that person’s family may put money into a special tax-advantaged account. The first $100,000 in an ABLE account will not count against the $2,000 Supplemental Security Income (SSI) resource limit, nor will it count against asset limits other programs, such as Medical Assistance, may have.

This new work incentive is a big deal: it means that if you get a job, you can start saving up some money without losing your benefits.

As with other types of tax-advantaged accounts, like retirement accounts and 529 educational expense accounts, ABLE accounts have restrictions:

  • They are only for people whose disabilities began before they turned 26 (no matter how old they are now).
  • They can only be opened through specific programs or institutions.
  • A person with a disability and that person’s family may not contribute more than a combined total of $14,000 in 2015 (that number will go up a bit each year).
  • Money in an ABLE account can only be used for specific things, such as:
    • Education
    • Housing
    • Transportation
    • Help getting and keeping work
    • Health care
    • Assistive technology, and
    • Other approved expenses.
  • A person can only have one ABLE account.

You cannot open an ABLE account yet – the U.S. Department of the Treasury needs to write all of the regulations for these accounts and it will take some time for financial institutions or state programs to understand the accounts and be prepared to offer them to the public.

Keep your eyes open for news on ABLE accounts, since you may be able to make your first contributions later this year!

Learn more about the ABLE Act.