News and Commentary

Families Can Save More in ABLE Accounts in 2018 to Help Pay for Disability-Related Expenses by Lee Hediger

The new tax law in effect for 2018 provides an opportunity for people with disabilities to save more money in ABLE accounts and qualify for a special saver’s credit.

The U.S. government introduced ABLE accounts in 2015 to help disabled individuals and their families save money to pay for disability-related expenses without any risk of losing government-provided Medicaid and Supplemental Security Income benefits. Distributions and earnings paid from ABLE accounts are tax-free when they are paid to disabled beneficiaries to cover housing, education, transportation, health and wellness, employment training and support, assistive technology and other disability-related expenses.

The maximum amount an individual may contribute to an ABLE account for a disabled beneficiary in 2018 is $15,000. To maximize this savings opportunity, families now have the ability to roll over and transfer funds from a 529 plan into an ABLE account when the beneficiary of the college savings plan is a member of the same family as the ABLE account beneficiary. In addition, 2018 marks the first time that disabled individuals may contribute a portion or all of the money they earn from employment to their ABLE accounts when they do not receive employer contributions to workplace 401(k) retirement plans. For 2018, beneficiaries who live in the continental U.S. may contribute up to $12,140 to their ABLE accounts. The contribution limit is $13,960 for residents of Hawaii and $15,180 for residents in Alaska.

Under the new tax law, ABLE account beneficiaries may also qualify to claim on their federal income tax returns a non-refundable saver’s credit of up to $2,000 when they are at least 18 years old, they are not full-time students or dependents claimed on another person’s tax return, and they meet specific income requirements. A credit can reduce the amount of tax an individual owes to the federal government, or it may increase the refund that the government pays back to taxpayers.

The introduction of ABLE accounts allows disabled individuals to preserve public assistance and save as much as $100,000 tax-free. Once ABLE account assets exceed the $100,000 threshold, public assistance may be suspended. One way to avoid these saving limits and allow families to allocate unrestricted amounts of money to care for special-needs children without jeopardizing their eligibility for government aid is to establish a special needs trust, which can be customized to meet each family’s unique circumstances.

About the Author: Lee F. Hediger is a co-founding director and chief compliance officer with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, 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. Any 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.

hile we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. 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.