Empowering Individuals With Disabilities: The ABLE Account Advantage
Tax-Advantaged Savings For A Secure Future
ABLE accounts are tax-advantaged savings accounts for individuals with disabilities, designed to allow them and their families to save for qualified disability expenses (QDEs) without jeopardizing eligibility for means-tested federal benefits such as Supplemental Security Income (SSI) and Medicaid. These accounts are established under state-run programs, but federal law sets out the main rules.
Major ABLE Account Changes Under The One Big Beautiful Bill Act: At-A-Glance Comparison
| Prior Law | OBBBA Enhancement | Effective Date | |
| Age of Onset for Eligibility | Before age 26 | Before age 46 | After Dec. 31, 2025 |
| Annual Contribution Limit | Gift tax exclusion + working beneficiary add-on | Same, with permanent inflation adjustment | After Dec. 31, 2025 |
| 529 Plan Rollovers | Allowed, but set to sunset in 2025 | Made permanent | After Dec. 31, 2025 |
| Saver’s Credit | Up to $2,000, temporary | Up to $2,100, permanent, SECURE 2.0 Act provision repealed with credit increasing | After Dec. 31, 2026 |
| Qualified Roll Overs | None | New “Trump Accounts” allowed to be rolled | After Dec. 31, 2025 |
Essential ABLE Account Facts
This section provides a concise summary of essential facts about ABLE accounts under the OBBBA, highlighting updated aggregate limits, permanent inflation adjustments to contributions, and key compliance rules. It outlines the tax-free growth opportunities, new reporting requirements, and the consequences of nonqualified distributions.
- Aggregate Limit: The total balance in an ABLE account cannot exceed the state’s limit for 529 college savings plans, but SSI disregards only the first $100,000 for resource purposes.
- Inflation Adjustments: The OBBBA makes permanent the inflation adjustment for the annual contribution limit and the additional contribution for working beneficiaries.
- Reporting & Compliance: The OBBBA maintains and clarifies reporting requirements for ABLE programs, including electronic reporting to the IRS and Social Security Administration.
- Tax-Free Growth: Earnings in an ABLE account are not taxed if used for QDEs, which are broadly defined to include education, housing, transportation, health, employment support, and more.
- Nonqualified Distributions: If distributions exceed QDEs, the earnings portion is included in gross income and subject to a 10% penalty, with exceptions for death or return of excess contributions.
OBBBA Opens New Doors To Financial Empowerment
The OBBBA significantly expands and enhances ABLE accounts by broadening eligibility, making higher contribution limits and rollovers permanent, increasing the saver’s credit, and clarifying and improving the administration of these accounts. These changes are designed to further the goals of financial independence and security for individuals with disabilities, while maintaining the protections for means-tested federal benefits.
If you are ready to maximize your ABLE account benefits or need guidance on OBBBA changes, contact GBQ today for expert assistance and personalized support. Let us help you navigate the new rules and secure your financial future!
By Tara Bollinger, CPA, CMA, CGMA, Director, Tax & Advisory
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