For over a decade ABLE accounts were accounts that very few could access due to strict age restrictions. However, on January 1, 2026, the ABLE Age Adjustment Act under the SECURE Act 2.0 was approved, expanding access to these amazing, tax-advantaged accounts to millions by increasing the age of disability onset from 26 to 46 years-old. It is estimated that about six million Americans can begin to utilize these accounts starting in 2026, including over one million military veterans.
What are ABLE accounts?
ABLE stands for Achieving a Better Life Experience. They are tax-advantaged accounts meant for people with disabilities. Their primary purpose is to allow people with disabilities to save and invest for disability-related expenses without threatening their eligibility for supplemental security income and Medicaid. Many people will be surprised to learn that a person receiving aid from these programs could lose access to them if they have over $2,000 in their checking and savings. ABLE accounts bypass this rule to allow people with disabilities to save up to $100,000 to save for future expenses without jeopardizing their often-times, much-needed benefits.
What disabilities qualify?
Any disability that meets the requirements for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) qualifies for an ABLE account as long as the beneficiary experienced symptoms of the disability before the age of 46. Physical disabilities as well as many mental disabilities qualify. Certain disabilities such as blindness, hearing loss, epilepsy, and autism, qualify based on the severity of the symptoms. If you don’t meet the Social Security Administration’s criteria, you can still be eligible if you receive a physician’s certification.
How does my money grow in these accounts?
ABLE accounts are administered and organized by state agencies so investment options may vary depending on which state’s services you’re using. However, most ABLE accounts have five options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive. These options reflect various investment strategies. The amount of stock-to-bond ratio changes as you move from conservative to aggressive. For example, the conservative option consists of 90% bonds and 10% stocks/equities, while the aggressive option consists of 90% stocks/equities and 10% bonds. But account holders are not limited to using just one; users can contribute to all five simultaneously!
What are the tax benefits of ABLE accounts?
ABLE accounts are like 529 plans except that ABLE accounts are used for qualified disability expenses, while 529 plans are used for qualified educational expenses. Contributions to these accounts grow tax-free as long as the distributions are for qualified disability expenses. What classifies as qualified disability expenses is a lot broader than one might think.
Examples of qualified disability expenses:
- Housing (rent, mortgage utilities, property taxes, and home modifications)
- Transportation (public transit fee, specialized vehicle purchases or modifications, and rideshares)
- Basic living expenses (groceries, food deliveries, household items)
- Health & wellness (medical bills, medications, fitness devices)
- Occupational (tuition, educational textbooks, job training)
- Assistive technologies, legal fees, service animals, and funeral arrangements
It’s important to remember to track and document your expenses, in case the IRS scrutinizes anything.
You can also rollover amounts from 529 plans to an ABLE account, allowing individuals to find even more ways to build assets in their ABLE accounts.
Also in some states, such as Pennsylvania, contributions to these plans can be tax deductible up to $19,000, meaning you can decrease your Pennsylvania taxable income with your contribution to ABLE accounts to lower your Pennsylvania tax liability.
How do I open an ABLE account and begin contributing?
First, you will need to select a state program. Not all states have ABLE accounts, but don’t fret if your state doesn’t have one because many states offer accounts to out-of-state residents. You can do more research about the pros and cons of each state’s ABLE programs by going to https://www.ablenrc.org/select-a-state-program.
Next, you will need to prove to your state’s ABLE account provider that you are eligible by sending them a physician’s certificate stating that you have a permanent disability and started to experience symptoms before the age of 46. You can also use an SSDI or SSI award letter. Additional items you should gather include but are not limited to: proof of identity, social security number, and other disability documentation.
Once your disability is proven, you will typically get a letter in the mail instructing you on how to open your account. Most states, including Pennsylvania, have an online portal for ABLE account users to manage their accounts. You can check out Pennsylvania’s website at https://www.paable.gov. Once your account is set up, you can begin to contribute to one of the five or more investment options detailed above.
With more Americans being able to access this account, it’s important to become familiar with them and decide if it’s a good choice for you or a family member.
About the Author: Eric Murphy, CPA is a Senior Accountant on DunlapSLK’s Tax Services Team. Eric holds a Master of Accountancy degree from Temple University. He provides tax preparation, planning and research services for both corporate and individual clients and assists in training team members in matters of taxation. You can reach Eric at emurphy@dunlapslk.com or 215.997.7280.