What is an ABLE account and how can it help you save for your future?

Managing a disability can come with significant financial challenges, and if you depend on federal benefits programs that limit the amount of assets you can have, it can feel like you're caught in a double bind: You want to save for your future, but you also need financial support from Supplemental Security Income (SSI), Medicaid or similar programs to afford the present.  

Thankfully, ABLE (Achieving a Better Life Experience) accounts offer a pathway to save and invest without jeopardizing your eligibility for these important benefits. And in certain circumstances, they can help you grow a pool of tax-advantaged money even if you don't rely on any government assistance. Read more to find out how they work.

An ABLE account is a tax-advantaged savings and investment account managed at the state level to help individuals with qualified disabilities save and invest without running the risk of becoming ineligible for certain federal government benefits programs, such as Medicaid and SSI.

The federal government has strict asset limits — typically around $2,000 total — for individuals who receive disability benefits, otherwise they risk losing access. ABLE accounts help solve this problem by providing qualified persons with accounts where they can save and invest their money that won't count toward those asset limits (with a few exceptions).

In 2025, you can contribute up to $19,000 per year to an ABLE account, and if you're employed but don't have access to a work-sponsored retirement plan, most states allow you to contribute an additional $15,560 from your wages (Alaska and Hawaii have slightly higher limits). Contributions to an ABLE account are still after taxes, and not pre-tax like a traditional 401(k) or IRA.

Depending on the ABLE account, an individual can save a lifetime maximum of between $235,000 to $596,925.

To qualify, you must have a significant disability that was diagnosed before the age of 26 (though you can open your account at any age). Beginning January 1, 2026, the age requirement for the diagnosis will increase to 46.

Typically, your disability is considered "significant" enough for an ABLE account in one of two ways: Either you are already on SSI or Social Security Disability Insurance (SSDI), or a licensed doctor certifies that you have a disability that meets the "marked and severe" condition as recognized by the Social Security Administration.

The account can either be opened by you or a legal guardian, provided you also meet the state-specific program requirements. For example, some states such as Florida or Georgia require you to be a state resident to open an ABLE account through their program, while other states like New York or Virginia allow non-residents to participate.

Beyond letting you save money without going over the asset limits of certain benefits programs, ABLE accounts also provide some tax advantages. Specifically, earnings within the account grow tax-deferred, meaning you won't pay taxes on the growth or when you withdraw the funds — so long as you spend the withdrawal on a qualified disability-related expense (as determined by the IRS). Examples of these include:

• Health care and therapy costs
• Assistive technology
• Educational expenses
• Transportation costs
• Housing-related expenses

If you withdraw funds from your ABLE account to spend on an expense that isn't qualified, you'll have to pay income taxes on the earnings portion of that withdrawal, plus a 10% penalty.

ABLE accounts are useful financial tools, but it's important to be aware of some of their limitations and costs. For example, if you have more than $100,000 in your account, your SSI benefits will likely be suspended. However, for most other assistance programs (such as Medicaid), no similar limit exists.

It's important to see if your ABLE account has any fees, including account maintenance fees, investment fees and sometimes transaction fees. The fees will vary depending on the state and the specific investment options chosen, so be sure to review the state's program to understand what costs apply.

Every state that offers ABLE accounts provides investment options designed to help you grow your savings over time. These options typically include pre-set investment portfolios ranging from conservative (lower risk and lower potential returns) to aggressive (higher risk with the potential for higher returns). This allows you to choose a portfolio that matches your financial goals and how much risk you're willing to take. 

After selecting the portfolio that best suits your needs, you'll need to open an account through the program's website. During the process, you'll usually be asked to provide your personal information and make an initial deposit to fund the account.  

If you're not comfortable with investing, you can still benefit from using your ABLE account as a savings account. While it depends on the state, many ABLE programs give you the option of putting your money in an FDIC-insured account instead of investing it in the market.

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