ABLE Account Eligibility Improvement

Kiplinger interviewed Mary Morris, the CEO of Commonwealth Savers, which manages ABLEnow, the country’s largest independent ABLE program, on eligibility changes to the ABLE account.

QUESTION: Millions more Americans with disabilities have become eligible to contribute to special savings vehicles known as ABLE accounts this year. What is behind the shift, and how is it a game changer?

ANSWER: The change really elevates ABLE accounts, which are tax-advantaged accounts that allow people with disabilities to save for current and future expenses without jeopardizing federal benefits such as Medicaid. Before this year, you could only contribute to these accounts if you became disabled before age 26. Starting this year, eligibility expands to include those who became disabled before age 46. Overall, we believe this change could affect as many as 6 million people, potentially raising the total number of Americans eligible for an ABLE account to more than 15 million.

QUESTION: What groups are most likely to benefit?

ANSWER: Members of the military as well as first responders and emergency workers, who very often have work-related disabilities that manifest in their late twenties, thirties and early forties, are among the biggest groups now eligible for an ABLE account. And while on-the-job injuries happen often because of the physically demanding nature of the work, we also see many mental health challenges. This is particularly true of those who served in the armed services—whether it’s post-traumatic stress disorder or any in-service disability that might impact their cognitive function.

QUESTION: How do the accounts work?

ANSWER: Like Roth IRAs, ABLE accounts [the acronym stands for Achieving a Better Life Experience] are funded with after-tax dollars. You don’t pay taxes on investment gains in the account, and your withdrawals are never taxed as long as you use the money for qualified purposes, which include a variety of expenses related to maintaining health, independence and quality of life. Up to $100,000 in an ABLE account is excluded as countable assets for Supplemental Security Income purposes, and the money doesn’t count for Medicaid purposes at all [generally a disabled person can’t have more than $2,000 in assets to qualify for federal benefits], which allows beneficiaries to keep their benefits while building savings. In 2026, the standard annual contribution limit for ABLE accounts is $20,000, and many states offer tax deductions for contributions to an ABLE account as well.

QUESTION: How do you know if your disability qualifies?

ANSWER: Qualifying disabilities are very broad and include neurological disabilities as well as physical ones. You can find a list of qualifying disabilities on every ABLE website, or you can visit abletoday.org/eligibility. On our website, ABLEnow.com, we have an eligibility quiz to walk people through the criteria.

QUESTION: Any advice on how to maximize the long-term value of these accounts?

ANSWER: Most states offer these programs and have different investment options for how you can save. With our program, ABLEnow, and most others, you can choose among aggressive, moderate and conservative investment portfolios with a number of different types of investments, including equity and fixed-income funds.

The other way to maximize an account is through gifting. Anyone — a family member, a friend, a church member — can contribute on a disabled person’s behalf. For birthdays, holidays or special occasions, instead of getting tangible gifts, ABLE account holders can ask folks to put money into their ABLE account.

QUESTION: What other changes would you like to see to these accounts?

ANSWER: The ABLE age-of-onset adjustments have been our highest priority, but another priority would be the ability to put in lump-sum amounts. An example would be if someone gets an insurance settlement of $100,000; as things stand now, they couldn’t put that money directly into an ABLE account because it’s more than the $20,000 annual contribution limit. That’s something we will continue to work on with Congress and that I hope may go through in the not-too-distant future.

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Emma Patch is a senior writer at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.

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