The Age Limit for This Important Savings Account Is Set to Increase. Here's Why That's a Big Win

Expanding the ABLE Act could potentially help millions of Americans. 

For a long time, disabled Americans have been caught in a catch-22. Many depended on public benefits like SSI, SNAP, and Medicaid to get by but were only eligible if they had less than $2,000 in liquid resources, like checking or savings accounts. Having little money meant they could receive the benefits they needed, but it also meant there was no extra. And for millions of Americans, that meant retiring with almost nothing to their names.

ABLE accounts

In 2014, President Barack Obama signed the Tax Extenders package, which included the Achieving a Better Life Experience (ABLE) Act. Thanks to the ABLE Act, anyone who became disabled by age 26 could qualify for tax-favored accounts. 

Congress voted in 2021 to expand the ABLE Act, and beginning January 2026, anyone with an onset of disability before age 46 will be eligible to open an account. Widening the safety net protects those who develop health issues as they approach middle age and provides one more layer of protection for soldiers wounded in the line of duty. 

How the ABLE Act works

The beneficiary on the account is the account owner. Anyone, including the beneficiary, family, friends, or a trust, can contribute to the account. While contributions must be made using post-tax dollars and are not tax deductible on federal taxes, the income earned on the account is not taxed. That means the beneficiary never needs to worry about running into a large tax bill due to the gains on their account. 

The ABLE Act considers the significant costs of living with a disability. For that reason, eligible individuals and their families can establish an ABLE savings account that will largely not impact their eligibility for programs like SSI, Medicaid, FAFSA, HUD, and SNAP. 

By making tax-free ABLE accounts available to cover qualified disability-related expenses -- like housing, transportation, and education -- the law is designed to ease the financial burden faced by individuals with disabilities. 

Who's eligible? 

At this time, individuals with disabilities with an onset before turning 26 are automatically eligible to open an ABLE account if they receive SSI or SSDI benefits. 

Those who do not receive SSI or SSDI but meet the age of onset disability could still be eligible. As long as they meet Social Security's definition regarding functional limitations and receive a letter of disability from one of the following, they may be eligible: 

• Licensed physician
• Doctor of osteopathy
• Doctor of dental surgery or medicine
• In some cases, a doctor of podiatric medicine, optometry, or a chiropractor

As long as an individual experienced the onset of a disability before age 26, they can apply, even if they are older at the time of application. 

Reminder: The onset of disability requirement will expand to age 46 beginning January 2026. 

Contribution limits

For 2023, the maximum annual ABLE account contribution is $17,000. However, individuals with a job whose employers do not contribute to a retirement plan can also deposit an amount equal to their annual gross salary or that meets the Federal Poverty Level. 

The beauty of expanding ABLE account eligibility is the number of people who will be able to improve their living conditions without sacrificing basic needs.