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  ABLE Accounts


ABLE Accounts – A New Savings Tool for Individuals with Disabilities

If you or a family member has a disability that began before the age of 26, you may be able to benefit from a new type of savings account called an ABLE Account.  This savings option was made available through the passage of the Steven Beck Jr. Achieving a Better Life Experience Act that was signed into law in December 2014. 

What is an ABLE Account and why is it significant?

The ABLE Act allows individuals who were deemed disabled before the age of 26 to save money in specific accounts and not jeopardize government benefits.  These are the first accounts available to formally recognize the extra and significant costs of living for a person with disabilities.

  • Persons with disabilities depend on a variety of public benefits for assistance with health care, food, housing assistance, etc.
  • To be eligible for public benefits, a person generally must meet certain resource limitations, such as reporting no more than $2000 in cash savings, retirement funds, and other significant value at any one time.

What is the eligibility for opening an ABLE Account?

  • Age requirement: must be disabled before age 26
  • Severity of disability: Have been determined to meet the disability requirements for Supplemental Security Income (SSI) or Social Security disability benefits (Title XVI or Title II of the Social Security Act) and are receiving those benefits,


Submit a “disability certification” assuring that the individual holds documentation of a physician’s diagnosis and signature, and confirming that the individual meets the functional disability criteria in the ABLE Act (related to the severity of disability described in Title XVI or Title II of the Social Security Act).

What are some important requirements of ABLE Accounts?

  • Each eligible individual may have only one ABLE Account
  • ABLE Accounts are tax advantaged in that the annual growth is tax deferred and is tax free if used for “qualified disability expenses”. Federal income taxes and 10% tax penalty apply if money is withdrawn from an ABLE Account for something other than qualifying expenses.
  • “Designated beneficiary” is the account owner (although another person such as a parent or guardian may be allowed signature authority over the account).
  • Wisconsin residents have the option to participate in accounts set up in states who have a non-residency requirement.
  • Contributions to an ABLE Account are treated as a state income tax benefit and are tax deductible for Wisconsin residents.
  • Total Annual contributions may not exceed the federal gift tax contribution, which is currently $14,000 (this will periodically be adjusted for inflation).
  • Multiple individuals may make contributions to an ABLE account. 
  • Aggregate contributions may not exceed the state limit for 529 savings accounts, typically set at over $250,000.

What can an ABLE Account be used for?

Distributions from an ABLE account may be made for “qualified disability expenses”.  The term “qualified disability expenses” should be broadly construed to permit the inclusion of basic living expenses and should not be limited to:

  • expenses for items for which there is a medical necessity, or
  • which provide no benefits to others in addition to the benefit to the eligible individual.


Qualified disability expenses” are expenses that relate to the designated beneficiary’s blindness or disability and are for the benefit of that designated beneficiary in maintaining or improving his or her health, independence, or quality of life.    Examples of expenses include: costs for education, housing, transportation, employment training and support, health, prevention and wellness, burial and legal expenses, costs for financial management, etc.


Will ABLE accounts replace other planning tools?

There are limitations with using the ABLE Account as the only means to prepare for caring for a loved one with special needs over their lifetime.  For the majority of families, these accounts will not be the primary account for family (ie. Parents, grandparents, siblings) to save money for providing financial resources for the support of their loved one with Special Needs. 

What are the limitations of an ABLE Account?

  • Annual funding limitations based on the annual gift tax exclusion amount ($14,000 in 2016)
  • Maximum funding of $100,000 before losing Supplemental Security Income (SSI), which is a monthly income used for many individuals to fund housing and other necessary life-long supports.
  • Medicaid Payback Provision at the passing of the individual with the disability which requires any remaining money in the ABLE Account to be paid back to the government for resources received over the individual’s lifetime.

Are ABLE Accounts available to be opened today?

  • Yes, 4 state programs are currently available in Ohio, Tennessee, Nebraska and Florida as of June 15, 2016.

Where do I go for more information about ABLE Accounts?

ABLE Accounts will be an additional tool that families can use to save for current and future expenses for their loved one who is disabled.  They will be an important part of a Special Needs Financial Plan, and it is essential to work with both financial and legal professionals who understand how they work, and where they fit in the planning process.

This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific situation with a qualified tax advisor.

Securities and Advisory Services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.