Unlocking Financial Freedom: ABLE Accounts for Americans with Disabilities

ABLE accounts, established by the Achieving a Better Life Experience (ABLE) Act of 2014, are tax-advantaged savings and investment accounts designed to help individuals with disabilities save and invest for the future without losing eligibility for certain public benefits. These accounts offer several key advantages that cater to the unique financial needs and risk tolerance of individuals with disabilities.

One of the primary advantages of ABLE accounts is their tax-free growth and withdrawals. Contributions to an ABLE account are made with post-tax dollars, but the savings and investment growth are not subject to federal taxes. Additionally, distributions from an ABLE account are tax-free if used for qualified disability expenses. This allows individuals with disabilities to build savings over time without worrying about tax implications.

ABLE accounts also have higher contribution limits compared to traditional savings accounts. In 2021, the annual contribution limit was $15,000 per year. However, certain employed ABLE account beneficiaries may make an additional contribution up to the lesser of their compensation for the tax year or the poverty line for a one-person household. This allows individuals with disabilities to save more money in their ABLE account without exceeding the contribution limits.

Another advantage of ABLE accounts is their flexibility in spending. ABLE accounts can be used to pay for a wide range of qualified disability expenses, including housing, education, transportation, health, prevention and wellness, employment training and support, assistive technology, and personal support services. This flexibility allows individuals with disabilities to use their ABLE account funds to cover a variety of needs without losing eligibility for public benefits.

ABLE accounts also offer a range of investment options to cater to the unique financial needs and risk tolerance of individuals with disabilities. These options are typically organized from lowest risk to highest risk, allowing individuals to choose the level of risk they are comfortable with. For example, the Indiana ABLE plan offers a "Conservative Income" option that invests in a mix of bonds, money market funds, and high-yield savings accounts, as well as "Moderately Aggressive Growth" and "Aggressive Growth" options that invest in a mix of stock and bond ETFs and index funds (Indiana ABLE Plan, 2021).

In conclusion, ABLE accounts offer a unique opportunity for Americans with disabilities to save and invest for the future while maintaining eligibility for public benefits. With their tax-free growth and withdrawals, higher contribution limits, flexibility in spending, and range of investment options, ABLE accounts cater to the unique financial needs and risk tolerance of individuals with disabilities. By offering these advantages, ABLE accounts help individuals with disabilities achieve financial stability and independence.

Reference(s):
Indiana ABLE Plan. (2021). Investment Options. Retrieved from