ABLE accounts help provide financial security for individuals with disabilities by allowing earnings in the account to grow free from federal taxes as long as withdrawals are used for qualified disability expenses. Individuals can invest up to $15,000 per year (for 2019) in the account. Savings grow free from federal taxes and may be free from state tax if used for qualified disability expenses. (Tax advantaged treatment applies to savings used for qualified disability expenses. State tax treatment varies.) If withdrawals are used for purposes other than qualified disability expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax.
Who Is Eligible?
- ABLE accounts are available to U.S. citizens and permanent residents who can legally own securities, including individuals who are blind or disabled from a condition that began prior to age 26.
- Those who meet the age requirement and may be eligible for SSI or SSDI benefits because of their disability.
- Individuals with a written, signed diagnosis from a licensed physician.
Who Would Benefit?
Families and individuals with disabilities can use funds in an ABLE account for qualified disability expenses including basic living expenses, housing and health care.