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You can open an ABLE account if you had a disability before the age of 26.
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An ABLE account is tax-free savings account for people with disabilities.
Open an ABLE account by applying to a state’s ABLE program online.
You can deposit around $16,000 into an ABLE account annually.
Having a disability often requires extensive costs, and inequity in banking can make it difficult for people with disabilities to have opportunities to manage daily expenses and build wealth.
If you have a disability, you can gain some control over your finances by opening an ABLE account.
What is an ABLE account?
Achieving a Better Life Experience accounts, or ABLE accounts, are tax-free savings accounts for people with disabilities.
An ABLE account lets people with disabilities manage their money without worrying about how it may affect government assistance like Social Security income or Medicaid.
“ABLE accounts allow folks the opportunity to take some control over their finances,” said Miranda Kennedy, director of the ABLE National Resource Center. “Either for themselves as a person with a disability, or a family member who’s supporting someone who might not have the capacity in being able to establish that or support them.”
Most people with disabilities or family members can deposit $16,000 in an account annually.
However, if you have a job and your employer isn’t contributing to a retirement plan, you can put in more money. You can deposit an amount that’s equal to your annual gross salary or that meets the individual Federal Poverty Level — whichever is less. For 2022, the limit is $12,880 in the continental US, $16,090 in Alaska, and $14,820 in Hawaii.
You may use money in the account for any expenses related to your disability. Use it for everyday expenses — like transportation costs — or big purchases, like putting a down payment on a home.
Kennedy pointed out that people with ABLE accounts can also have a special needs trust, so you aren’t disqualified if you have a trust. A special needs trust allows you to establish a financial guardian for a person with disabilities if a parent or guardian dies. The financial guardian can help manage any inherited funds.
Who can get an ABLE account?
To be eligible for an ABLE account, you must have met one of the following requirements before the age of 26:
Qualified for SSI if you had a disability or blindnessReceived disability insurance benefits, childhood disability benefits, or disabled widow’s benefitsReceived a disability certification, or your parent or guardian can verify that you had a disability before the age of 26
Kennedy told Insider that people commonly mistake ABLE accounts as accounts that are solely for young people. However, anyone over the age of 26 can apply if they meet the requirements.
You can open an ABLE account if you are at least 18 years old. A parent or legal guardian who acts as a legally authorized representative can also open an account for the person with disabilities and manage it.
Should you get an ABLE account?
An ABLE account is a great option if you are a person with a disability looking for a way to manage your personal finances. You can open and set up the account by yourself and make financial decisions independently.
It’s also a good choice if you or a family member with a disability feel like you have limited opportunities for saving money.
If you are currently receiving government assistance for housing or food, there is a limit to how much money you can have in cash or a bank account. However, the ABLE account isn’t usually factored in since it’s a tax-free account. For example, the SSI program doesn’t count anything below $100,000 in an ABLE account.
Kennedy told Insider that ABLE accounts can also be beneficial during uncertain times.
“We had a guy share on a podcast,” said Kennedy, “‘What if you were in Minnesota and your furnace goes out in the middle of winter, and that’s $4,000. What are you going to do?’ If you have this money in an ABLE account, your stress goes down, and your quality of life goes up. You’re able to be more in control, and that’s significant.”
How do you open an ABLE account?
You can’t walk into a bank to open an ABLE account. Instead, you’ll need to apply through an ABLE state program.
Currently, there are about 45 ABLE state programs available, with active programs in all states except Idaho, North Dakota, South Dakota, and Wisconsin.
You don’t have to be a resident to apply to some of the programs. The ABLE National Resource Center has a map tool with specific details about each state program.
Kennedy advises people to look at several state programs in addition to their state program since there are many possibilities.
“There’s going to be one that’s a good fit for some individual situations that might not be good for another,” said Kennedy. “But people should always look at their home state first because there are instances where a state program will incentivize and further support someone opening a plan in their own state if they’re a resident of that state.”
Once you’ve chosen a state program, you can fill out an application online through the state ABLE program’s website. The application will ask for basic identification information, and you can get help over the phone or through email if you have any questions when filling it out.
Quick tip: You can open an ABLE account if you don’t have a social security number. An ITIN number can work instead.
Additional resources and tools
If you’re curious to learn more about the ABLE program, the ABLE National Resource Center has many resources and comprehensive guides.
You can compare state programs through the website’s Three-State Comparison Tool. Read about how people with different types of disabilities have used the ABLE account through the ABLE NRC BIPOC Ambassador Program.
People with disabilities impacted through challenging times they can also look to the National Disability Institute Financial Resilience Center for additional ways to manage your money. The Financial Resilience Center will answer questions about health, managing money, and more. You can talk to an AFCPE-certified financial counselor, read through guides, or watch videos in American Sign Language.