Newly broadened ABLE accounts offer a 'significant retirement' resource for millions of Americans with disabilities

Millions of Americans Now Eligible for ABLE Accounts

As of January 1, a significant number of Americans gained access to ABLE accounts, specialized savings accounts designed for individuals with disabilities that offer notable tax benefits. Previously, eligibility was restricted to those whose disability began before age 26, but a recent legislative change has increased the qualifying age to 46.

This expansion means that, according to the National Disability Institute, the number of eligible Americans has jumped from 8 million to 14 million.

A Personal Story: Justine Chichester

Justine Chichester is among those newly eligible. In 2014, at age 39, she experienced a life-changing accident when she slipped outside her Miami home, resulting in paralysis from the waist down. Thanks to the updated law, she was able to open her ABLE United account this week.

“This will make a huge difference for my finances,” Chichester shared. “Living with a disability brings many challenges, especially the financial burden. Everyday expenses can quickly add up, making it even harder to save and manage money.”

Photo courtesy of Justine Chichester

How ABLE Accounts Work

ABLE accounts allow people with disabilities to save and invest after-tax dollars, with withdrawals for qualified disability expenses—such as housing, food, healthcare, or education—being tax-free, similar to a Roth IRA. Importantly, these funds are not counted as income for public assistance programs.

Juliana Crist, who leads ABLE programs at Vestwell, which manages accounts in 19 states, noted, “We’re nearly doubling the number of people who can benefit from ABLE accounts. This is a powerful financial tool.”

Many clients use their ABLE accounts for long-term savings, including retirement. “If you’re eligible, this could be your most effective retirement savings option,” Crist added.

The typical ABLE account at Vestwell holds about $13,000, though some exceed $300,000. Account holders can choose from various investment options, but the most popular is a cash account with a debit card for easy access.

Background: The Origins of ABLE Accounts

The Achieving a Better Life Experience (ABLE) Act of 2014 established these accounts to help people with disabilities save and invest without risking their eligibility for benefits like Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and Medicaid.

Key Features and Benefits

• Tax-free investment growth and withdrawals for qualified expenses
• Funds in ABLE accounts are not counted as income for means-tested benefits
• Before ABLE accounts, individuals could not have more than $2,000 in savings and still qualify for certain benefits

Darcy Milburn, a specialist in disability finance, described ABLE accounts as a partial solution to the restrictive SSI asset limit.

Challenges to Adoption

• Eligibility was previously limited to those whose disability began before age 26
• Not all states offer ABLE programs, and features vary by state
• Lack of awareness about eligibility and how to open an account
• Some people may not identify with the term “disability,” even if they qualify

Eligibility and Rules

To qualify under the new guidelines, an individual must have a disability or blindness that is expected to last at least a year and began before age 46. Those receiving SSI or SSDI for a condition listed on the Social Security Administration’s Compassionate Allowances List are eligible. Others can qualify by providing a physician’s certification that their disability started before age 46. A sample certification form is available from the National Resource Center.

Qualifying disabilities must be significant and long-term, covering a broad range of physical and mental conditions, such as autism, ADHD, bipolar disorder, learning disabilities, multiple sclerosis, traumatic brain injuries, respiratory and neurological disorders, and certain cancers.

There are no income restrictions for opening an ABLE account. Anyone can contribute, and only one account is permitted per individual. Parents can open accounts for their children, and rollovers from 529 plans are allowed up to $20,000 annually. Some states also offer employer tax credits for contributions.

Contribution Limits and Spending Guidelines

• For 2026, the annual contribution limit is $20,000
• Most working account holders can contribute an extra $15,650 if not participating in a workplace retirement plan (higher limits apply in Alaska and Hawaii)
• State-set lifetime contribution caps range from $235,000 to nearly $600,000, but SSI recipients face a practical cap of $100,000

Funds can be used for a wide array of qualified expenses, including daily living costs, housing, utilities, medical care, technology, legal fees, transportation, education, employment training, personal support, and wellness programs. Withdrawals for qualified expenses are penalty-free, but nonqualified distributions are subject to income tax and a 10% penalty on earnings.

Potential Drawbacks

• In some states, remaining funds after the account holder’s death may be subject to Medicaid recovery, though several states exempt ABLE accounts from this rule
• Accounts are typically opened online, which may be a barrier for those without internet access, though some states accept paper applications
• Some accounts have withdrawal waiting periods, so advance planning is necessary for monthly expenses

Despite these challenges, Mary Morris, CEO of Commonwealth Savers, emphasized the positive impact of ABLE accounts on financial stability for people with disabilities, especially with the recent expansion in eligibility.

Choosing an ABLE Plan

Begin by exploring your state’s ABLE program. Not all states offer plans—Idaho, South Dakota, North Dakota, and Wisconsin, for example, do not—but many plans are open to nonresidents, and you can transfer your account between states. While there is no federal tax deduction for contributions, some states provide tax incentives for residents.

The ABLE National Resource Center offers direct links and comparison tools for all available state plans. Many plans require no minimum deposit to open an account, and the average initial deposit is just $25.

Looking Ahead

Chichester, who now works part-time for the Disability Independence Group and is regaining mobility after years of therapy, is optimistic about the financial security her ABLE account will provide. “This account gives me flexibility and peace of mind that I haven’t had since my injury over a decade ago. It supports the independence I’ve worked so hard to achieve.”