Having a child with a disability can significantly change a family’s situation and can also come with additional financial burdens. It’s estimated that families with children with disabilities need to earn 17.8% more per year. According to Autism Speaks, raising a child with a disability can cost as much as $2.4 million over their lifetime. Luckily, a tax-advantaged savings plan called ABLE can help. And combining an ABLE plan with an education savings 529 account can be even more helpful. Here’s what every parent of a child with a disability should know.
A small child with Down Syndrome has fun playing in the park with his father on a sunny day.
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Fundamentals: Enabling a Better Life Experience ABLE accounts are tax-advantaged savings accounts for individuals with disabilities and their families. The account owner is the child with a disability, and income earned on the account is not taxed. Eligibility is limited to individuals whose disability began before age 26 (increasing to age 46 in 2026). People who meet the age requirements to receive SSI and/or SSDI benefits are automatically eligible to open an ABLE account. Others may be eligible if they meet the Social Security Administration’s definition of disability, subject to additional eligibility criteria. The IRS has a handy guide, as does the ABLE National Resource Center.
Other important factors: Money in an ABLE account generally does not affect eligibility for means-tested federal and state benefits, such as Supplemental Security Income (SSI) and Medicaid. Contributions are limited to the annual federal gift tax exclusion ($18,000 in 2024). ABLE account balances up to $100,000 are not subject to the $2,000 SSI personal asset limit. If your ABLE account balance exceeds $100,000, your SSI benefits may be stopped until your account balance falls below $100,000.
NEW YORK, NY – JULY 12: People take part in the first annual Disability Pride Parade on July 12. [+] New York City, 2015. The parade brings attention to disability rights and coincides with the 25th anniversary of the Americans with Disabilities Act. (Photo by Stephanie Keith/Getty Images)
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Allowable Expenses: “Qualified Disability Expenses” means any expenses incurred by a designated beneficiary as a result of living with a disability, including education, food, housing, transportation, employment training and assistance, assistive technology, personal support services, medical expenses, financial management and administrative services, and any other expenses that contribute to health, independence, and/or quality of life. Only one ABLE account is allowed per person.
State program flexibility: Since 2015, people with disabilities have been able to enroll in state programs that accept out-of-state residents, which can be found here. Similar to state 529 college savings plans, states offer eligible individuals and families multiple options to open ABLE accounts with different savings and/or investment strategies. ABLE account holders can only change their investment options twice a year. See a list of state programs here.
Comparing ABLE accounts to special needs trusts or pooled income trusts: ABLE accounts offer beneficiaries and families more choices and control. The cost of opening an ABLE account is significantly lower than the cost of opening a special needs trust (SNT) or pooled income trust. ABLE accounts give account holders control over their funds and provide other options if their circumstances change.
Tips for choosing your state’s program: Here are some things to consider when choosing from the 49 ABLE plans offered by states across the country: What documents are required? Is there a minimum amount required to open an account? What are the fees to open and maintain the account? What are the investment options?
How to use ABLE and 529 accounts together: Although 529 accounts can only be used for qualified education-related expenses, families may benefit from using both 529 and ABLE accounts together. The IRS provides detailed instructions for how a family member can rollover funds from a 529 plan into another family member’s ABLE account. An ABLE account must have the same beneficiary as the 529 account, or the same family member as the 529 account holder. However, due to complexities regarding funds, ownership and expenses, we recommend consulting with a financial advisor to ensure you are able to reap the benefits that both types of accounts can provide.