News and Commentary

ABLE Accounts Offer Tax-Free Savings Options for Persons with Disabilities By Lee F. Hediger

The introduction of ABLE accounts in 2015 has helped millions of people with disabilities and their families save as much as $100,000 for qualifying living expenses without any risk of losing government benefits, such as Supplemental Security Income (SSI). Contributions to these accounts grow tax-free while distributions used to pay for qualifying disability expenses (QDEs) are not counted as taxable income to beneficiaries. Here is what you need to know to take advantage of these unique savings accounts.

Who is Eligible for an ABLE Account?

To qualify for ABLE accounts, individuals can be any age, but they must have developed a qualifying disability for which they are entitled to SSI before they turn 26 years old. An eligible individual may have no more than one account for which he or she is both the account owner and the beneficiary.

How Do I Set Up an ABLE Account?

ABLE accounts are similar to 529 college-savings programs in that they are offered and administered by individual states rather than the federal government. Generally, owners/beneficiaries and/or their legal guardians will open an account in the state where the beneficiary resides. For this reason, it is important to carefully review the specific eligibility requirements and tax benefits of ABLE accounts in your state of residence.

What is the Maximum Amount I Can Contribute to an ABLE Account?

Annual contributions to an ABLE account are limited to $16,000 per beneficiary in 2022, with the first $100,000 in accumulated savings excluded from the beneficiary’s personal asset limit for purposes of determining SSI eligibility. Currently, that limit is $2,000. This means that the total amount that multiple sources may deposit into an account for one beneficiary cannot exceed $16,000 for the year, the same amount as the annual gift tax exclusion.

However, if account owners are employed and do not participate in employer-sponsored retirement plans, they may make additional annual contributions equal to the lesser of 1) their gross wages for the taxable year or 2) the federal poverty level, which is $12,880 in 2022.

How May I Use ABLE Account Savings?

To avoid income tax on distributions from ABLE accounts, owners/beneficiaries must use those funds to pay for expenses that improve their health, independence and/or quality of life. This can include costs for housing, education, transportation, health and wellness, nutrition, employment training and support, assistive technology and other disability-related expenses. Distributions used for other reasons will not only be taxable to the recipient, but they will also lead to penalties and may affect an individual’s eligibility to receive government benefits.

What Happens if the Balance in my ABLE Account exceeds $100,000?

The owner/beneficiary risks suspension of his or her SSI benefits when the balance in his/her account balance exceeds $100,000. Those benefits will resume when the account balance falls below that limit.

ABLE accounts have become a critical tool for people with special needs and their families. Not only do they provide an easy and low-cost option for preserving much-needed public assistance, but they also give owners/beneficiaries the opportunity to work, earn wages and save for their lifetime care. Moreover, when combined with a special needs trust, the amount of potential savings is tremendous.

About the Author: Lee F. Hediger is a co-founding director with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Lee F. Hediger is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. All information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. RJFS does not provide tax advice. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

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Posted on September 14, 2022