Expanded disability programs may allow financial advisors to help clients and their families without affecting other government benefits.
Starting in 2026, the age at which you must be considered disabled to meet federal requirements for an ABLE account will increase from 26 to 46. This is expected to increase the number of people eligible by 6 million, including 1 million veterans, according to the ABLE National Resource Center. The Achieving a Better Life Experience Savings Plan allows qualified people with disabilities to save up to $100,000 tax-free.
ABLE accounts are administered through states and can be opened online. All states except Idaho, North Dakota, South Dakota and Wisconsin offer the program, although some programs don’t require account holders to live in the state where they open the account. The National Association of State Treasurers released an online resource on June 13 to compare features of each state’s program.
“ABLE accounts are a powerful savings tool, and we want as many people as possible to know about them and take advantage of their incredible benefits,” said Stacey Garrity, Pennsylvania state finance chair for the ABLE Savings Plan Network, a group formed by NAST.
The search and comparison tool consolidates information on program fees, account balance limits, state tax benefits and residency restrictions that vary by state.
“I think this opens the door to this community and says, ‘This isn’t just for people in their 20s,'” said Kelly Piacenti, assistant vice president at MassMutual, based in Somerset, N.J. “It applies to people in their late 40s, which is great, because we work with a lot of families who have had traumatic brain injuries or car accidents, and they can’t have an ABLE account because they’re over the age limit. So I think this opens up more opportunities for the disability community.”
Read more: Leveraging 529A ABLE Accounts for Disabled Beneficiaries to Reap the Emotional Benefits of Greater Financial Independence
The Better Living Experience Act, which created the account in 2014, was the first bill passed by Congress regarding Americans with disabilities since the landmark Americans with Disabilities Act of 1990. The ABLE Age Adjustment Act was adopted in November 2022 as part of an omnibus spending bill.
“Educating people about the ABLE Age Adjustment Act is one of our top priorities and a major focus for me,” Garrity said. “I know many of my fellow military members who became disabled while serving our country, many after turning 26. I want all of them to know that the upper age limit for disability onset will be raised to 46 starting January 1, 2026.”
Anyone can contribute to an ABLE account, including family members or employers, and some states offer tax credits or earned income tax deductions for contributors.
“ABLE accounts are often the first thing I recommend to people because they’re easy to set up and operate,” said Matthew Ricks of Haystack Financial Planning, a Long Island, New York-based RIA that focuses on the disability community.
ABLE accounts allow individuals with disabilities to withdraw funds and use them for qualified expenses, such as medical expenses, housing, living expenses, transportation, education expenses, assistive technology, personal support services, employment training and assistance, and legal fees.
Some states allow people with disabilities to use funds through debit or purchasing cards.
Piacenti noted that clients who work with fee-paying estate planners can use their ABLE account to pay for the services.
Using an ABLE account does not affect your eligibility for other benefits, such as Medicaid, federal housing benefits, or Social Security, as long as the account balance is less than $100,000.
Read more: Disability Dilemma: How to Use Retirement Tools for Children with Special Needs
ABLE can complement other estate planning tools for individuals with disabilities, such as special needs trusts and life insurance.
“If the person is relatively young, it’s difficult for families to think about someone dying so young,” Piacenti said. “Twenty or 30 years ago, many people with disabilities didn’t outlive their parents. Now they do. So it’s difficult for families to think about that person going through life without someone to care for them.”
Piacenti said ABLE accounts are different from special needs trusts in that they can replicate government benefits such as food and housing.
Funds in a 529 education savings account can be deposited into an ABLE account, and vice versa.
“ABLE has really helped in that a lot of people with disabilities are pursuing further education, and some of the things that a 529 can be used for are very similar to ABLE, but it doesn’t make the person ineligible,” Piacenti said.
Funds in an ABLE account can also be transferred to other family members who have disabilities.
Read more: IRS finalizes ABLE account regulations
Expanding knowledge about how clients can use ABLE accounts is a potential area of growth for advisors.
“I’ve had a lot of conversations with other planners and advisors,” Ricks says, “and the conversations we’re having are similar: ‘I didn’t know these plans existed. I have a family.’ While most advisors know about 529 plans, there seems to be a little lack of awareness. It’s the same law, just for a different type of community, different individuals.”
By working with an advisor, families can receive guidance on how to make the most of their ABLE account.
“My experience with ABLE accounts is that if a parent is saving for their child, the question is how do they fit that ABLE account into their broader plan, because it’s not that clear,” Ricks said.
However, ABLE accounts do have some limitations.
Annual contributions to the account cannot exceed the annual gift tax exemption of $18,000.
Piacenti said that in all but 13 states, ABLE has a repayment provision that allows the government to cover outstanding payments for benefits such as Medicaid after the account beneficiary dies.
“My point is, be aware that there are loopholes that could result in you having to pay the government back when you pass away,” Piacenti said.
Although an individual may have only one ABLE account, they may have multiple special needs trusts in the form of first-party and third-party trusts, depending on the origin of the property funding the trust.
“Like 529s and 401(k)s, they’re not perfect. They’re not a silver bullet,” Ricks said.
Piacenti said families considering special needs planning services should look for a Certified Special Needs Consultant, a credential offered by the American College of Financial Services, to ensure their adviser is well-informed.
Ricks agreed that advisers should seek the advice of external financial advisers who specialise in planning for clients with disabilities.
“I’m a big believer in, ‘When in doubt, seek out an expert,'” Ricks says. “There are a lot of planners out there who are just focused on contributing to this community, just like me. I’m certainly not the only one.”