What the ABLE account is and who can open one

An ABLE account is a tax-free savings account created under federal law for people with disabilities. The account lets you save money without losing means-tested benefits like SSI or Medicaid, which normally penalize savings. You can deposit up to $18,000 per year (as of 2024, though this amount may change), and the money grows tax-free. You withdraw it tax-free too, as long as you use it for "may have access to disability expenses" — a broad category that includes housing, food, education, employment support, health care, and transportation.

To open an ABLE account, you must have a disability that began before age 26 and meets Social Security's definition. This includes people receiving SSI or SSDI, people who have been denied those benefits but won the appeal, and people certified by a physician as having a condition that will result in blindness or death before age 26. You do not need to be receiving benefits currently — you just need to meet the medical criteria.

Key Takeaways

  • ABLE accounts are offered by private financial institutions, not the government, though the government created the legal framework that allows them to exist.
  • You can hold only one ABLE account at a time, and opening one requires proof of disability and a Social Security number.
  • Deposits up to $18,000 per year are not counted as income for SSI purposes, and the account balance does not count as a resource for SSI if it stays under $100,000.
  • Money in an ABLE account must be spent on may have access to disability expenses, which include housing, food, education, employment, health care, and transportation.
  • Different financial institutions offer ABLE accounts with different fees, investment options, and features, so comparing them before opening is worth your time.

Which banks and financial companies offer ABLE accounts

ABLE accounts are offered by private financial institutions that have registered with the IRS to provide them. The most widely available options include Fidelity, Schwab, Sallie Mae, and Lincoln Financial, though the list changes and new providers enter the market regularly. Each institution sets its own fees, investment options, and account features. Some charge monthly maintenance fees; others waive them. Some offer only savings; others let you invest in mutual funds or stocks.

The best place to find current providers and compare their terms is the ABLE National Resource Center website (ablenrc.org), which maintains an updated list of all registered ABLE account providers and lets you filter by features like low fees, investment options, or mobile app availability. You can also search by your state, since some states have created their own ABLE programs with specific providers.

How to open an ABLE account step by step

Start by choosing a provider using the ABLE National Resource Center or by researching individual institutions. Once you have picked one, visit their website or call their ABLE account line to begin. You will need to provide your Social Security number, proof of identity (usually a driver's license or passport), and proof of disability.

Proof of disability can take several forms. If you receive SSI or SSDI, you can authorize the institution to verify your status directly with Social Security — this is the fastest route and requires no paperwork from you. If you do not receive benefits, you will need a letter from a physician stating that you have a disability that meets Social Security's criteria, or documentation of a prior Social Security information (approval or denial letter). Some institutions also accept documentation from the Department of Veterans Affairs or a state vocational rehabilitation agency.

Once your application is submitted, approval typically takes one to two weeks. The institution will contact you by phone or email to confirm your identity and disability status, then open the account. You can fund it immediately by linking a bank account, setting up direct deposit, or mailing a check.

How ABLE accounts interact with SSI and other benefits

The main reason people open ABLE accounts is that they do not trigger the resource limits that normally apply to SSI. If you receive SSI, your countable resources cannot exceed $2,000 (or $3,000 if you are married). Money in a regular savings account counts toward that limit and can cause your SSI to stop. Money in an ABLE account does not count as a resource for SSI purposes as long as the account balance stays under $100,000.

Deposits into an ABLE account also do not count as income for SSI. This means you can deposit $18,000 per year without triggering the SSI income limit or the one-third reduction rule that normally applies to unearned income. However, money you withdraw from the account and spend on non-may have access to expenses does count as income in the month you withdraw it, so be careful about withdrawals if you are close to the SSI income limit.

ABLE accounts do not affect Medicaid, SSDI, housing vouchers, or most other means-tested programs. However, some state programs have their own rules, so contact your state Medicaid office or benefits administrator if you are unsure how an ABLE account will affect your specific situation.

What counts as a may have access to disability expense

The IRS defines may have access to disability expenses broadly, which gives you flexibility in how you use the money. Housing counts — rent, mortgage, property taxes, utilities, home modifications, and home maintenance. Food and clothing count. Education and job training count, including tuition, books, supplies, and transportation to school. Employment support counts, including assistive technology, job coaching, and work-related transportation. Health care counts, including insurance premiums, copays, therapy, and medical equipment. Transportation counts, including vehicle purchase, maintenance, insurance, and public transit passes.

The rule is that the expense must be related to your disability or necessary for you to live independently or work. If you are unsure whether a specific expense qualifies, ask your ABLE provider before you withdraw the money. Some providers offer guidance; others direct you to IRS Publication 907, which lists examples.

Fees, investment options, and account features to compare

ABLE account providers differ significantly in what they charge and what they offer. Some charge no monthly maintenance fee; others charge $3 to $5 per month. Some charge transaction fees for deposits or withdrawals; others do not. Some offer only a savings account with a modest interest rate; others let you invest in mutual funds, stocks, or target-date portfolios. Some have mobile apps and online bill pay; others offer only phone and mail access.

If you plan to keep a large balance and invest it, fees matter more. If you plan to use the account as a simple savings vehicle, a low-fee or no-fee option may be better. The ABLE National Resource Center comparison tool lets you filter by fee structure and features, which saves time versus calling each provider individually.

What happens if you withdraw money for non-may have access to expenses

You can withdraw money from an ABLE account for any reason — there is no legal restriction. However, if you withdraw money and spend it on something that does not count as a may have access to disability expense, that withdrawal counts as taxable income in the month you make it. You will owe federal income tax on it, and possibly state income tax depending on where you live. You may also owe a 10 percent penalty on the earnings portion of the withdrawal (though not on your contributions).

More importantly for SSI recipients, a non-may have access to withdrawal counts as income for SSI purposes. If you receive SSI, a large non-may have access to withdrawal in a single month could reduce or stop your benefit for that month and possibly the next. Plan withdrawals carefully, and ask your ABLE provider or a tax professional if you are unsure whether a specific expense qualifies.

Frequently Asked Questions

Can I have more than one ABLE account?

No. Federal law allows you to hold only one ABLE account at a time. If you open an account with one provider and later want to switch to another, you must close the first account before opening the second. Some providers offer the option to transfer your balance to another ABLE provider, which avoids closing and reopening.

What if I no longer meet the disability criteria?

You can keep the account open and continue to use it. However, you cannot make new deposits once you are no longer disabled according to Social Security's definition. Money already in the account remains yours and can be withdrawn at any time, though non-may have access to withdrawals will be taxable and may affect your benefits.

Do I need a job to open an ABLE account?

No. You do not need to be employed or receiving any specific benefit. You only need to meet Social Security's disability criteria and have a Social Security number. The account is designed for people with disabilities regardless of employment status.

What if my disability was diagnosed after age 26?

You cannot open an ABLE account if your disability began after age 26, even if it is severe. The age-26 rule is a federal requirement. If your disability began before age 26 but was not diagnosed until later, you may still be able to open an account — contact a provider to discuss your specific situation.

Can someone else manage my ABLE account for me?

Yes. You can name an authorized representative or power of attorney to manage the account on your behalf. The process and requirements vary by provider, so ask about it when you open the account or contact your provider if you already have one.