IN 2014, FEDERAL LEGISLATION paved the way for states to offer ABLE accounts—tax advantaged plans that allow individuals with disabilities to save for ongoing expenses without threatening their eligibility for crucial government support, such as Supplemental Security Income or Social Security Disability Insurance. Previously, people with disabili ties had to have less than $2,000 in total assets to maintain their eligibility for such programs, which made it difficult for them to live independently.
As is the case with 529 collegesavings accounts, ABLE accounts (the acro nym stands for Achieving a Better Life Experience) grow taxfree, and the earn ings aren’t taxed as long as the money goes toward qualified disability expenses. The maximum annual contribution to an ABLE account rose to $16,000 on January 1. The limit, which is tied to the IRS’s gift tax exclusion, had been capped at $15,000 since 2018.
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