An ABLE account lets you save money without losing government benefits

An ABLE account is a tax-advantaged savings account created specifically for people with disabilities. Unlike a regular savings account, money you put into an ABLE account does not count against the resource limits that determine whether you stay on programs like Supplemental Security Income (SSI) or Medicaid. You can save up to $17,000 per year (as of 2023, though this amount may change) without triggering the loss of benefits that would normally happen if you had too much money in the bank.

The account is named after the Achieving a Better Life Experience Act, which Congress passed in 2014. Each state runs its own ABLE program, and you must have become disabled before age 26 to open one. The account works like a regular bank account—you can deposit money, withdraw it, and use a debit card—but with special tax rules that make saving possible when you otherwise could not.

Key Takeaways

  • You must have a disability diagnosis and have become disabled before age 26 to open an ABLE account, regardless of your current age.
  • Money in an ABLE account does not count against SSI or Medicaid resource limits, so you can save without losing benefits.
  • You can deposit up to $17,000 per year without tax penalty, and earnings in the account grow tax-free.
  • Each state runs its own ABLE program with different features, fees, and investment options, so compare before opening.
  • An ABLE account is separate from a special needs trust and serves a different purpose—you can have both.

Who can open an ABLE account

To open an ABLE account, you must have a disability that began before you turned 26. The disability does not have to be the same one you have now—what matters is the age when your disability first started. You can open an account at any age after that, even if you are 50 or 60, as long as you became disabled before 26.

You will need to prove your disability status. Most people use their Social Security disability information letter, but you can also use a letter from a physician, an Individual Education Plan (IEP) from school, or a information from the Veterans Administration if you are a disabled veteran. Each state program may accept slightly different documents, so check your state's requirements before you apply.

You do not have to be receiving SSI or Medicaid to open an ABLE account. The account is available to anyone who meets the disability and age requirements. However, the main benefit—not counting the money against resource limits—only matters if you are on a means-tested benefit program.

How the $17,000 annual deposit limit works

You can put up to $17,000 into your ABLE account each year without paying a penalty tax. This is the annual contribution limit, and it resets on January 1. If you contribute $17,000 in January, you cannot contribute again until the next calendar year, even if you withdraw the money.

The limit applies to all contributions combined—money you deposit yourself, money someone else deposits on your behalf, and money your employer deposits if you have a workplace ABLE program. If you go over $17,000 in a single year, you owe a 6 percent excise tax on the excess amount. That tax is paid once, not every year.

Money that is already in the account can grow without limit. If your account earns $500 in interest or investment gains, that does not count toward the $17,000 limit. The limit is only on new money going in, not on earnings.

How ABLE accounts affect SSI and Medicaid

If you receive SSI, the resource limit is normally $2,000 for an individual (or $3,000 for a couple). Any money you have in a regular savings account counts toward that limit, and if you go over it, your SSI payment stops. An ABLE account is excluded from this calculation, meaning the money inside does not count at all.

The first $100,000 in an ABLE account has no effect on your SSI payment. If your account grows above $100,000, your SSI payment is suspended (not terminated) for any month in which the balance stays above that threshold. Once the balance drops back below $100,000, your SSI payment resumes the next month. This is different from a regular account, where going over the limit ends your benefits entirely.

Medicaid treatment varies by state. Some states do not count ABLE account balances at all. Others treat balances above $100,000 the same way SSI does—suspending Medicaid for that month but resuming it when the balance drops. Check your state's Medicaid rules before you deposit large amounts.

What you can use an ABLE account for

Money in an ABLE account can be spent on anything, with no restrictions. You can withdraw it for rent, food, medical bills, education, transportation, or entertainment. Unlike a special needs trust, which has rules about what money can be used for, an ABLE account is yours to control and spend as you choose.

You access the money through a debit card, online transfer, or ATM withdrawal, just like a regular bank account. Some ABLE programs offer investment options—you can choose to keep money in a savings account earning interest, or move it into stocks, bonds, or mutual funds. Others offer only savings accounts. Check what your state program offers.

If you work, some employers offer payroll deductions directly into ABLE accounts, similar to a 401(k). This makes regular saving automatic and can be easier than remembering to deposit money yourself.

How ABLE accounts differ by state

Each state runs its own ABLE program, and they are not all the same. Some states charge monthly maintenance fees ($2 to $5 per month is common), while others charge no fees. Some offer investment options and higher interest rates on savings, while others offer only basic savings accounts. Some states let you open an account online in minutes, while others require you to mail in documents.

You can open an account in any state's program, not just your own state. If your state's program has high fees or limited features, you can open an account through another state's program. However, you can only have one ABLE account total—you cannot open accounts in multiple states.

Compare your state's program with others before you open. The ABLE National Resource Center (ablenrc.org) lists all state programs and their fees, features, and investment options side by side. Some popular programs include New York's ABLE program (low fees, good investment options) and Ohio's program (no monthly fees).

ABLE accounts versus special needs trusts

An ABLE account and a special needs trust serve different purposes and can work together. An ABLE account is controlled by you and funded by you or people you choose. A special needs trust is controlled by a trustee and typically funded by family members or an inheritance. An ABLE account has a $17,000 annual deposit limit, while a trust has no limit on how much money can go into it.

Money in a special needs trust does not count against SSI or Medicaid resource limits at all, even if the balance is millions of dollars. Money in an ABLE account does not count until it exceeds $100,000. If you expect to receive a large inheritance or have family members who want to leave you money, a special needs trust may be better. If you want to save your own earnings or receive regular gifts from family, an ABLE account is simpler and cheaper to set up.

Many people have both: an ABLE account for their own savings and earnings, and a special needs trust for family money or large gifts. They work together without conflict.

Frequently Asked Questions

Can I open an ABLE account if I am already over 26?

Yes. What matters is when your disability began, not your current age. If you became disabled at age 20, you can open an ABLE account at age 50. If you became disabled at age 30, you cannot open one, even if you are now 40.

What happens to my ABLE account if I go back to work and earn too much money?

The account itself stays open and the money stays in it. If you earn enough to lose SSI or Medicaid, that is a separate issue from the ABLE account. The account does not close or get frozen. You can keep saving in it and using it, even if you are no longer on benefits.

Can someone else deposit money into my ABLE account?

Yes. Family members, friends, or anyone else can deposit money into your account. However, all deposits count toward the $17,000 annual limit combined. If your mother deposits $10,000 and you deposit $8,000 in the same year, you have hit the limit and cannot accept more deposits until January 1.

Do I have to report my ABLE account to Social Security?

You should report the account to Social Security when you open it, so they know to exclude it from your resource calculation. Tell your local Social Security office or call 1-800-772-1213. Provide them with the account number and the state program name. This prevents confusion if Social Security reviews your case.

What if my state does not have an ABLE program?

Every state now has an ABLE program. If your state's program does not meet your needs, you can open an account through another state's program instead. You are not required to use your home state's program.