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Trust Law/Level IV · Trusts that care/4.1 Disability/Lesson 4

ABLE accounts and how they compare

How US ABLE accounts work for SSI and Medicaid, who can open one, and how they compare with special needs trusts.

Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Since the 2015 PATH Act removed the residency rule in IRC §529A, a person may open an ABLE account in any state’s program and choose the lowest fees. Only one ABLE account per person is allowed.
  2. Total contributions from all sources are capped at $20,000 for 2026; a working beneficiary not contributing to a 401(k), 403(b) or 457(b) may add up to the lesser of earnings or the prior year’s one-person poverty line.
  3. Rolling 529 college savings into the same beneficiary’s or a family member’s ABLE account is tax-free and, after 2025 legislation, permanent. The rollover counts toward that year’s $20,000 contribution cap.
  4. A beneficiary contributing their own money can claim the saver’s credit under IRC §25B. Earnings stay federally tax-free only when spent on qualified disability expenses such as housing, education, transport or health.
  5. SSA disregards the first $100,000; above that SSI is suspended without time limit and SSI-based Medicaid continues. The catch: a housing withdrawal kept past the month received counts as a resource.

MaterialsYour state’s ABLE program website or plan description (many states also accept residents of other states)The current ABLE annual contribution limit from SSA or the IRS ($20,000 for 2026)A list of the public benefits your relative currently receives (for example SSI, Medicaid or SNAP), from their award letters

Wonder

  1. Can my brother keep his SSI if family members put money into his ABLE account?
  2. What happens to the money left in an ABLE account when the beneficiary dies?
  3. How is an ABLE account different from a Special Needs Trust?

Explore

  1. In the United States, ABLE accounts were created by the ABLE Act of 2014 and are governed by Internal Revenue Code §529A. Each program is set up by a state (or a state agency), and a person may have only one ABLE account. Earnings grow free of federal income tax when spent on qualified disability expenses. For SSI, contributions are not counted as the owner’s income, and up to $100,000 of the balance is disregarded as a resource. Most other federal means-tested programs disregard the account entirely.
  2. Eligibility depends on when blindness or disability began. Under the ABLE Act, onset had to be before age 26. SECURE 2.0 §124 raised this to before age 46 for tax years beginning on or after 1 January 2026, so someone whose disability began at, say, age 30 can now be eligible. A person qualifies by receiving SSI or Social Security disability benefits based on that onset, or through a disability certification. The age test concerns when the disability began; a person can open an account at any age.
  3. Total contributions from all sources, including the owner, family and friends, are capped each calendar year: $19,000 for 2025 and $20,000 for 2026, according to SSA. The cap is calculated from the federal gift-tax annual exclusion, but since a 2025 change it uses a different inflation base year, so for 2026 it is higher than the $19,000 exclusion. A beneficiary who works and does not contribute to a 401(k), 403(b) or 457(b) plan that year may add more from their own earnings, up to the lesser of those earnings or the prior year’s federal poverty level for one person.
  4. For SSI, SSA disregards up to $100,000 of an ABLE balance. If the amount above $100,000, together with other countable resources, puts the person over the $2,000 limit, SSA suspends SSI payments rather than ending eligibility. SSA says this suspension has no time limit, so the usual rule ending eligibility after 12 months of suspension does not apply, and the person keeps SSI-based Medicaid. Payments can resume once resources are back within the limit. Money withdrawn for housing and kept past the month it was withdrawn counts as a resource.
  5. The disabled person owns the account. If they are a minor or cannot manage it, a person with signature authority, such as a parent, legal guardian or agent under a power of attorney, may open and run it for them, but does not own it. Qualified disability expenses include housing, education, transportation, employment support, health, assistive technology, and funeral and burial costs. When the beneficiary dies, after outstanding qualified expenses are paid, a state that files a claim is repaid for Medicaid paid since the account opened, less any Medicaid buy-in premiums.
  6. ABLE accounts and special needs trusts (SNTs) are often described as complementary rather than either/or. An ABLE account is in the person’s own name, is easy to open and suits modest yearly amounts, but has the contribution cap, the age-of-onset test and possible Medicaid payback. A third-party SNT funded by family has no contribution cap, no age test and no federal payback, and a trustee makes the decisions. Some families use both. Which fits depends on the person’s situation; SSA, the state Medicaid agency or a benefits planner can help.

Key facts

  • In the US, ABLE accounts come from the ABLE Act of 2014 and are governed by IRC §529A; each person may have only one.
  • Total contributions from all sources are capped at $19,000 for 2025 and $20,000 for 2026 per beneficiary, per SSA; working beneficiaries may add more from earnings.
  • For tax years beginning on or after 1 January 2026, the disability or blindness must have begun before age 46 (previously 26).
  • SSA disregards up to $100,000 of an ABLE balance; if the excess puts a person over the resource limit, SSI is suspended without time limit and SSI-based Medicaid continues.
  • At death, after outstanding qualified disability expenses, a state that files a claim is repaid for Medicaid paid since the account opened.
  • The disabled person owns their ABLE account; in a special needs trust, a trustee holds the money and decides how it is used.

Exercise nine, six, three, one

9CollectList up to 9 disability-related expenses your relative had in the past year (some families have fewer), such as therapy copays, home changes, equipment or transport.
6ClusterSort these 9 expenses into 6 categories: medical, housing, education/employment, transportation, personal support, and other.
3DistillReduce the 6 categories to 3 groups: expenses that look like qualified disability expenses, housing expenses (which have SSI timing rules), and expenses you are unsure about.
1CrystallizeWrite 1 sentence naming the question about an ABLE account you would most want answered for your relative, and whether you would ask SSA, your state ABLE program or a benefits planner.

Fact check

Dates, figures and claims checked against the published sources listed below.

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