What Is an ABLE Savings Account?

For people receiving disability benefits through Social Security, money is often tight. Paradoxically, though, earning more money can actually endanger a person on disability. This is especially true for people receiving SSI, who face the prospect of losing benefits if they have more than $2000 in savings or assets.

Because of how detrimental this is to the financial well-being of people with disabilities, a number of solutions have been proposed. One of these, the Achieving a Better Life Experience (ABLE) Act, allows some people with disabilities to save money without penalty. It was passed in 2016.

If you became disabled prior to the age of 26, you may be eligible for an able account.

About the ABLE Act and ABLE Savings Accounts

With the passing of the ABLE Act, some progress has been made for SSI recipients who want to overcome poverty, as well as SSDI recipients. Florida was one of the first states to implement an ABLE program, known as ABLE United. Like all ABLE programs, ABLE United allows people with disabilities to save money in a tax-advantaged bank account.

While the ABLE Act itself is a federal law, each state chooses whether or not to implement an able program. States which offer able accounts are subject to the rules laid out in the ABLE Act, but are free to add additional rules as they choose.

The ABLE Act is not without restrictions. The federal rules are as follows:

  • Recipients must have a qualifying disability, one that would qualify the person for SSI or SSDI. This disability must have started before the age of 26.
  • Anyone can contribute to the account who wants to do so, but only one account is allowed per person.
  • Total contributions from all sources are capped at $14,000 per year. And if the account owner is receiving SSI, they may lose eligibility if the total account balance exceeds $100,000. SSDI recipients can save as much as $418,000 in an ABLE account.
  • There’s a limit to what the funds can be used for. According to the ABLE Act, the funds in the account are reserved for Qualifying Disability Expenses (QBE), but this rule is less restrictive than it sounds. This can include anything from medical expenses to housing and education, so the restrictions are unlikely to cause issues for most recipients.

If you receive Social Security disability, or if you think you might have a qualifying condition, an ABLE account might be the key to your financial future. An experienced disability attorney like Katherine can help you understand these programs and how they might help you. Schedule a free consultation by phone, email, or text message to get started!

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