Table of Contents

  2. ABLE Account, Special Needs Trust (SNT) or Both?
  3. An ABLE Account, a SNT, an IRA, a Roth IRA or All of the Above
  4. Using the ABLE Account in Special Needs Planning E-BOOK:
    1. Protecting Social Security Eligibility
    2. ABLE to Work, Save, and Have Control of Your Own Money
    3. Representative Payees Managing Income and Social Security Benefits
    4. Grandparents Gifting to an ABLE 
    5. 529 Fund Rollovers
    6. Saver's Credit
    7. Assessing Your ABLE Account Investment Choices


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Begin with the basics: 

ABLE Basics

  • ABLE or 529 (A) Accounts are tax-advantaged savings accounts for individuals with disabilities.
  • Eligible individuals and their families will be allowed to establish ABLE savings accounts that will not affect the individual’s eligibility for SSI, Medicaid and other means tested public benefits.
  • The beneficiary of the account is the account owner.
  • An individual may only have one ABLE account.
  • Contributions to an ABLE account:
    • may be made by any person (the account beneficiary, family and friends),
    • are made using post-taxed dollars
    • are not tax deductible, although some states may allow for state income tax deductions for contribution made to an ABLE account.

ABLE Eligibility

  • Accounts can be established by or on behalf of a person with a disability, provided that the beneficiary's disability began before age 26.
  • If the person with a disability meets this age criteria and receives SSI and/or SSDI, they are automatically eligible to establish an ABLE account.
  • If the person with a disability does not receive SSI and/or SSDI, but meets the age of onset requirement, they may be eligible if they meet Social Security’s limitations criteria and receive a letter of certification from a licensed physician.
  • The account owner may be any age but again, the age of onset of disability must have occurred before their 26th birthday.

Benefits of the ABLE account

  • Protecting eligibility for means tested government benefits such as SSI, Medicaid and SNAP.  Protecting eligibility for these public benefits (SSI, SNAP, Medicaid) requires meeting a means or resource test; the recipient may not have more than $2,000 in their name.
  • Money in an ABLE account grows tax- free. Income earned in ABLE accounts will not be taxed provided the funds, when withdrawn, are used for qualified expenses.
  • Tax-free withdrawals can be made for "qualified disability expenses". For the first time in public policy, the ABLE Act recognized the extra and significant costs of living with a disability. 

Qualified Disability Expenses (QDEs)

  • A "qualified disability expense" means any expense related to the designated beneficiary as a result of living a life with disabilities.
  • In many states, a pre-paid debit card is available with an ABLE account. The ease of use may allow some account owners an expanded role in managing their finances.
  • Qualified Disability expenses may include: education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses, which help improve health, independence, and/or quality of life.

ABLE Account Contributions & Limits

  • The total annual contributions by all participating individuals, including family and friends, for a single tax year in 2021 is $15,000. Under current tax law, $15,000 is also the maximum amount that individuals can make as a gift to someone else and not report the gift to the IRS (gift tax exclusion).
  • The total contributions that can be made to an ABLE account is subject to each individual state's 529 savings account limits. Many states have set this limit at more than $300,000 per account. 
  • In addition to the annual contribution limit of $15,000, an ABLE account owner who works and does not participate in an employer sponsored retirement plan may also contribute his or her compensation up to the federal poverty level (FPL) amount for a one-person household.  The FPL amount applicable to 2020 ranges from $12,490 for individuals who live in the continental USA, to $15,600 for individuals who live in Alaska or $14,380 for individuals who live in Hawaii.
  • The first $100,000 in an ABLE account is not counted as an asset for purposes of SSI eligibility. Once an ABLE account balance exceeds $100,000, the beneficiary's SSI payments are suspended until the account balance drops below $100,000. However, the beneficiary remains covered by Medicaid regardless of the account balance.
  • Be aware: The ABLE has a “Medicaid Pay-Back” provision. Any monies remaining in an ABLE account when an owner dies may be subject to a reimbursement claim by Medicaid for expenses from the time the account was open.

Opening and Investing an ABLE Account

  • Regardless of where you might live and whether or not your state has decided to establish an ABLE program, you are free to enroll in any state’s program provided that the program is accepting out of state residents. To determine which state ABLE programs are accepting out of state programs, please refer to the individual state pages- Examples of state ABLE programs accepting enrollment nationwide include Ohio, Nebraska, and Tennessee. An example of a state ABLE program only accepting in-state residents would include the Florida ABLE United program.
  • Like 529 college savings plans, states are likely to offer qualified individuals and families multiple options to establish ABLE accounts with varied investment strategies. You will need to align your investment choice with when and how you plan to use the funds in the ABLE and your risk tolerance. You may change your investment choices in your ABLE account up to two times per year.

Comparing ABLE Programs

Many ABLE programs allow enrollment to eligible individuals regardless of their state of residence. When comparing State ABLE programs, you may want to consider the following questions in order to find a program that best meets your needs:

Opening an Account

  • What proof will the ABLE program require for you to document in order to open an account or show that your disbursements are qualified expenses?
  • Is there a minimum contribution to open an ABLE account?
  • Is there a fee to open an account and, if so, how much is that fee?

Maintaining the Account and Fees

  • Is there a required minimum contribution to your account? If so, what is the amount?
  • Are the fees front-end loaded or are they reduced if you leave your funds invested for several years?
  • Are there restrictions on how often you can withdraw funds from your account?

Investment Opportunities

  • What are the investment options the state ABLE program offers?
  • Are the options likely to meet your needs for limiting risk with the growth of your contributed dollars to the ABLE account?
  • Does the program offer any unique or value-added program elements to help you save, contribute to your account, grow the account, and manage your invested dollars?
  • Does the state program offer any unique or value-added program elements (such as a match or rewards program, financial literacy info or program for beneficiaries) to help you save, contribute to your account, grow the account, and manage your invested dollars? If so, what is it?

Unique to Your State

  • Does your state have a program and, if so, do they offer a state income tax for contributions to their account?
  • Is there a “debit card/purchasing card” available with the program? Are there added costs to this?

Information from: The ABLE National Resource Center

Note that when distributing for non-qualified expenses, the pro-rata portion of the earnings attributable to the non-qualified expenses are subject to tax plus a 10 percent penalty. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes. Investing involves risk including loss of principal. Prior to investing in an ABLE account, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other benefits available for investments in such state’s ABLE program. Consult with your tax adviser before investing.


Choosing between an ABLE Account and a Special Needs Trust ?


Except in rare circumstances, DON'T. iconfinder_Cancel__Red_34208


 An ABLE account and a Special Needs Trust (SNT) may both: 

  • provide money for a person with special needs  and 
  • protect their eligibility for government benefits,  

BUT they are very different options. Making the choice that best fits your goals and circumstances will yield the most satisfying outcome. 


The role of an ABLE account in planning for a person with special needs is as a “wealth accumulation” vehicle or in simple terms, a way to save money.  

While the ABLE offers benefits including tax-advantaged savings and the ability to use funds to pay for a variety of qualified disability benefits, including housing, there are several notable limitations.  

These limitations will, in many cases, suggest the ABLE is best used as an additional means of savings rather than as the central element of your financial plan.  


SNT (specifically, a 3rd party or supplemental needs trust) is most commonly set-up by a parent (or grandparent) to provide for the supplemental needs of their family member with a disability. Most of the time, the trust is funded at the death of the grantor with either insurance or personal savings. Once a SNT is funded, it must file a tax return each year and the trust’s earnings are subject to a high tax rate. 

 Generally, the SNT will be classified as an “estate planning” vehicle for the parent rather than an optimal account in which to save while they are alive.  

 There are circumstances, such as when parents have substantial assets (placiing them in the highest tax brackets), when it may make sense to fund a SNT during the parents’ lifetime. In this case, it may make sense to consider using both an ABLE and a SNT. A funded SNT may contribute to an ABLE account for its beneficiary.  This will allow for the ABLE’s broader use of funds without jeopardizing eligibility for government benefits. 

Although the two planning tools are not truly comparable, here is a chart detailing the attributes of the ABLE and the SNT. 



ABLE Account 

Third Party SNT 

Account set up by 

  • Person with disability (owner) 
  • Parent 
  • Guardian 
  • Authorized representative (PSA) 


Grantor may be anyone other than the beneficiary (person with disabilities). 

Number allowed  

1 account per person. 


Person may have multiple SNTs. 




Anyone may contribute up to $15,000 (2021 annual gift exclusion) and employed account owners may be able to contribute more.  


Anyone, other than the beneficiary may contribute. 

Who may make distributions?  


Owner, guardian, or authorized representative. 




There are account service fees and investment fees but generally, they are regarded as comparatively modest. 

There will be a legal fee to set up the trust (generally at least $2000) and the trustee may charge an annual fee based upon the balance in the trust.  




Person with qualifying disability onset before age 26.  


Beneficiary must meet SSA’s definition of “disabled”.  

Account limits 


May save up to $100,000 without impacting SSI. Above that limit, SSI suspended, but not eliminated.  



Tax on account earnings.  

  • Earnings accumulate tax free in the account.   
  • Distributions for qualified expenses are tax-free. 


Trust must file an annual tax return and tax rates on income are high. 

Use of Funds 


Qualified Disability expenses may include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses, which help improve health, independence, and/or quality of life. 


  • The funds may be used for any purpose the trustee deems appropriate.  
  • If funds are spent on food or housing, the beneficiary’s government benefits may be jeopardized.  

Upon Beneficiary’s Death 

Funds remaining in an ABLE account after all qualified expenses have been paid may be claimed by the Medicaid Pay-back provision. 

The grantor of the trust will determine the distribution of assets at the death of the beneficiary.  




Depending on a parent’s estate size and planning, another option to keep in mind is to just keep it simple and save for the child directly in the parent’s own name.  While this has benefits and drawbacks from a purely financial point of view, it gives the parent complete control of how funds are spent.  

While the choice of savings vehicle is important, regardless of how you save- in an ABLE account, a trust, in your own name or another vehicle- the important thing is to save money for the lifetime support of your family member with a disability. 



An ABLE Account, a SNT, an IRA, a Roth IRA or All of the Above?  

 A Royal Flush of SavingsRetirement accounts may act as powerful estate planning tools and also  present a unique opportunity to plan for children with special needs.  


The Setting Every Community Up for Retirement Enhancement or SECURE Act - effective January 1, 2020 - made important changes for both retirement account owners and beneficiaries to consider in their financial planning. One major change was the elimination of the "stretch" provision, in which a beneficiary could take distributions from an inherited IRA over the course of their lifetime and the establishment of the “10-year rule”. Non-exception beneficiaries are now required to now take a full distribution of the assets held in an inherited IRA within a 10-year period.  

Exceptions to the “10-year Rule”

Individuals with sizable retirement accounts will want to speak with their tax advisor to discuss the impact of this change on their estate planning. It may make sense to discuss the strategy of having a SNT as a beneficiary of their retirement account. As an exception the 10-year rule, individuals with disabilities retain the ability to take distributions throughout their lifetime.  For more information about about this strategy, please read When a Special Needs Trust is a Beneficiary of a Retirement Account.  There is also an application for the ABLE account here with the beneficiary receiving distributions (annual RMDs) in their ABLE account.  

Are you a candidate for a Roth Conversion?  

 If you want to leave retirement assets to your heirs, converting some or all of these assets to a Roth IRA is something to consider.  Ask yourself: 

  • Is my current tax rate lower than my anticipated future tax rate? 
  •  Do I have space in my marginal tax bracket above my current level of taxable income?  
  • Do I want to convert my retirement savings to a tax-free legacy for my heirs? 

If you answered “yes” to the above questions, it may be time to talk with your tax and estate planning professionals to determine if it makes sense to convert some retirement savings to a Roth this year.   

To read more about this strategy and review a case example, take a look at the 10-year Rule and After-Tax Strategies to Consider 





Depending on a parent’s estate size and planning, another option to keep in mind is to just keep it simple and save for the child directly in the parent’s own name.  While this has benefits and drawbacks from a purely financial point of view, it gives the parent complete control of how funds are spent.  

While the choice of savings vehicle is important, regardless of how you save- in an ABLE account, a trust, in your own name or another vehicle- the important thing is to save money for the lifetime support of your family member with a disability. 


2. Protecting Social Security Eligibility

social_security_logoAdults with disabilities become eligible for social security at age 18. Social Security (SSI) provides adults with disabilities a monthly benefit payment and health insurance if they meet a low income and asset threshold. To maintain eligibility for SSI benefits, an individual cannot have more than $2000 of resources in his or her name.  This includes cash, bank accounts, stocks, and U.S. Savings bonds.  To read a summary of SSI policies regarding the ABLE account, see below.

Prior to the child's turning age 18, and before applying for SSI, make certain that the child meets this requirement. One strategy could involve transferring money to an ABLE account as this can help reduce savings beneath the $2,000 threshold and avoid the spend-down process.

Case Study 1: When an SSI recipient receives an inheritance.

cash-coins-currency-40140The Situation:

During the settlement of an estate, the personal representative (PR) (may also be known as the executor) of the estate discovered one of the beneficiaries was receiving government benefits. While this person could definitely use the funds to pay for furnishings in her home and some much needed dental work, if she received the inheritance directly, it would disqualify her from the important benefits she was receiving, as it would bring her above the $2,000 asset limit she is allowed. The personal representative was required to distribute $33,000 to this beneficiary prior to the projected closing of the estate in February of the following year.

The Options Considered:

In discussing the current situation with the beneficiary and the PR, we discussed options for the purpose of educating the parties involved of establishing a 1st party supplemental needs trust (also known as a d4A or Payback trust) where the beneficiary could transfer the entire inheritance to the trust and continue to receive her benefits. 

We also discussed the option of distributing a portion of the inheritance this year and then again next year using an ABLE account. If the PR distributed $18,000 this year, the beneficiary would be able to buy new furnishings that she needed with about $2,000, get the needed dental work for another $2,000, and deposit $15,000 (2020 limit) into an ABLE account, assuming she had made no prior deposits into the ABLE in this year. The PR would then need to make the final distribution of about $15,000 to the beneficiary by the February of the following year. If the PR does this, the beneficiary could then keep $1,000 in her savings account (still under the $2,000 limit) and add an additional $15,000 to her ABLE account. The beneficiary would then able to use these funds for qualified disability expenses as needed without losing her SSI income and other benefits.

The Benefits of Using an ABLE Account:

Because of the amount of the inheritance, she did not need to go through the expense of hiring an attorney to establish a 1st party supplemental needs trust, find a trustee, file taxes, and then have to ask someone for money when she needed it.  She was already living independently and managing her own expenses fairly efficiently.  The ABLE account allowed her to continue to receive her benefits and use the funds in the account as she needed them.

Case Study 2: SSI Impacted by an ABLE account

Source: ABLE National Resource Center

Mario has $101,500 in his ABLE account and $1,500 in his checking account. Since his countable resources are now $3,000 ($1,500 from ABLE account + $1,500 from checking account), his ABLE account has caused him to exceed the resource limit and his SSI payments are indefinitely suspended.

Mario continues putting money in his ABLE account for 24 more months and his indefinite suspension continues. Then, with the account balance standing at $107,000, he takes a $21,000 distribution to purchase a new car (a Qualified Disability Expense), dropping his account balance to $86,000 at a time when his checking account balance stands at $850. Since the ABLE account balance is below $100,000 it is once again exempt and his only countable resource is the $850 in his checking account. Mario’s SSI payments will be restored without the need for a new application. Mario had Medicaid eligibility continue when his SSI payments were suspended for 24 months based on excess resources caused by the ABLE account.

To read a more detailed case study and analysis, see ABLE National Resource Center. 

A summary of SSI policies regarding ABLE

(Source: POMS SI 001130.740,  )

 Contributions of the designated beneficiary to the ABLE account, from his or her monthly income (i.e., income other than SSI), will still count as income for SSI (subject to any income exclusions) and may result in a reduction to the SSI payment. Contributions from all others are excluded and not counted as income of the beneficiary.

• Earnings from the ABLE account are excluded and not counted as income or against SSI resource limits.

• Up to $100,000 of the account balance is excluded by SSI and not counted toward the $2,000 SSI resource limit.

• When the value of an ABLE account exceeds $100,000 and the amount above $100,000, combined with other resources, results in countable resources above $2,000, SSI payments are indefinitely suspended.

 Unlike the general SSI rules related to excess resources, SSI eligibility is not terminated after 12 months of excess resources related to the ABLE account. SSI payments will be restored once the overall countable resources are reduced to $2,000 or less. Under SSI’s ABLE policy, two years or several years could elapse and the beneficiary can return to SSI payment status when countable resources are again below $2,000.

 • When the SSI payment is suspended due to excess ABLE account resources, Medicaid eligibility will continue.(Note of caution to readers that while the cited policy does allow Medicaid to continue despite an ABLE account balance of more than $100,000, since Medicaid eligibility will be tied to SSI status in 41 states, we believe countable resources (other than the ABLE account) must still be below the $2,000 SSI resource limit in those states. In the remaining nine section 209(b) states, that opted to determine Medicaid eligibility separately, the ABLE account should still be an exempt resource but the person will have to meet any state-specific resource test to keep Medicaid. POMS SI 01715.010.)

3. ABLE to Work, Save and Have Control of Your Own Money 

Individuals earning their own money may be able to contribute their earnings, within limits, above the $15,000 limit. 

TTCO_hands_pexels-photo-233223The ABLE to Work provision was passed by Congress as part of the Tax Cuts and Jobs Act of 2017.  It is currently set to expire on January 1, 2026.

  • This provision allows an ABLE account beneficiary who works and earns income to contribute funds above the $15,000 annual limit.
  • The additional contribution may be up to the lesser of: the account beneficiary's earned income or the federal poverty line, which for 2020 is $12,760. This means it is possible to contribute up to $27,760 to an ABLE account in one year. 
  • Two additional elements of the law to be aware of when considering eligibility for the additional contribution:
    • (1) the ABLE beneficiary may not be a participant in their employer-based retirement fund, including if an employer makes contributions to the fund on their behalf.
    • (2) the Beneficiary's employment earnings deposited in an ABLE account are still counted in terms of Substantial Gainful Activity (SGA) or earned income, and will be taken into consideration when  determining eligibility for certain public benefits. 

Case Study 1:  When working, contribute more than the $15,000/year

Sheila, an ABLE owner has a job and makes $13,000. She does not participate in her employer's retirement plan. Although her parents have put $15,000 into her ABLE account in 2020, Sheila can contribute an additional $12,060 of HER OWN MONEY into her ABLE account.

One benefit of The ABLE Account is that it provides the opportunity for gainfully employed people with disabilities, who meet the qualifying requirements, to save and control their own money without fear of jeopardizing benefits. 
Case Study 2: Control your own money
The Situation:
"Sean" was diagnosed with bi-polar disorder and other concerns in his late teens and has struggled with many issues over the years.  One critical issue for him has been, and continues to be, money. He is able to work on a part-time basis, but usually does not work for an extended period of time. Working gives him a sense of purpose, but the fear of exceeding the $2,000 limit and losing his government benefits causes a great deal of anxiety. To maintain eligibility for monthly Supplemental Security Income (SSI), an individual cannot have more than $2000 of resources in his name. When he has had income, he often saved that money but if the balance crept up to the $2,000 limit, he would become very anxious and quit his job.  His therapist wants to be sure that he continues to work and does not depend solely on government benefits since then he becomes hyper-focused on not earning any money.  
The Options Considered:
One option for Sean could be to fund a 1st party supplemental needs trust (SNT) and put his money in this account. But the expense involved in creating, managing and reporting for this trust account is substantial when compared to amount of money that will be in the account.  In addition, money in the trust could not be used to pay for rent or utilities. 
Another option would be to make sure that Sean spent his money each month to stay below the $2,000 limit. The concept of “forced spending” simply does not make any sense.  Spending money in order to reduce savings below the $2,000 limit is referred to as the “Spend Down Process”. 
Sean now has a third option: Since his diagnosis was made prior to age 26, he is eligible to open an ABLE account. He could then save his money in this account and use it as needed. 
Prior to the creation of the ABLE account, a Special Needs Trust and the “Spend Down” were the only options.
The Benefits of Using an ABLE Account:
Sean's earnings do not typically exceed $15,000 (2020 limit); therefore technically he could save all of his earnings for future needs.  Practically he will not be able to do so, but he will be able to set aside money for future needs just like every other person! Having the ABLE account could grant Sean some sense of relief, as well as the independence associated with managing his own savings and spending.  The greatest benefit is that he may continue to work without fear of earning too much money. This is very important to his emotional well-being and self-worth.


4. Representative Payees Managing Income and Social Security Benefits 

depth-of-field-desk-essay-210661The ABLE is a great tool to help keep a balance below $2,000 in a Representative Payee (or an Individual's) checking account. A representative payee helps beneficiaries who need assistance in managing their social security benefits.

A representative payee’s responsibilities include:

  • Using benefits to pay for the current and foreseeable needs of the beneficiaries;
  • Appropriately saving any remaining benefits;
  • Keeping good records of how benefits are spent.*

*Source: Social Security Administration

Case Study - Managing a Representative Payee Account

The Situation:

Our client called and was very distressed that she had lost her son’s SSI income due to having more than $2,000 in his representative payee account.

The Options Considered:

In the past, our first go-to would have been to think creatively about items or services their adult child could both benefit from and pay for.  This would allow the parents to save their resources for their family’s goals. If the account continued to increase we would then suggest a “spend down” of the account to maintain eligibility for social security benefits.

In this case, we asked if there was anything he needed that she could spend the extra money on? She had already purchased a new computer for him as well as some new winter clothes. He really did not need much of anything else. She could put the additional money into his already established and funded first party supplemental needs trust. However, this was money he had inherited from his grandparents and she considered the SSI benefits “his money”.

So another option to be considered would be the ABLE Account, which would allow for contributions of excess funds above the $2000 threshold in the representative savings account.

 The Benefits of Using an ABLE Account:

The new ABLE account savings option allows contributions up to $15,000/year into the account, to be used for the beneficiary's short term needs or invested for longer term needs. As long as the account, housed in Massachusetts, remains under $100,000 her son’s benefits will not be impacted. When reviewing the investment options, we reminded her to carefully read all the materials should she choose the ABLE Account, and to choose the best investment for the beneficiary of the account: her child.

5. Grandparents Gifting to an ABLE 

cane-elder-elderly-33786The ABLE account provides grandparents with the opportunity to gift to their grandchild with a disability in the same manner as they contribute to their typical grandchild's 529 account. Many grandparents want to treat all of their grandchildren equally and using an ABLE account as a savings vehicle for gifting may help. 

Case Study: Generous Grandparents 

The Situation:

Our client has a strong belief in higher education and set the goal of establishing educational accounts for all of their grandchildren soon after they are born. They have just celebrated the arrival of their third grandchild. However, this beautiful baby boy was born prematurely and with significant health issues which will likely cause developmental delays.  It is already known that his hearing has meaningful, and perhaps total, impairment. 

Options to Consider:

While the ABLE account is an option for these generous grandparents to consider, they must be mindful of some of the limitations of the ABLE account that do not apply to 529 accounts. The limitations they should take into consideration might include:

  1. An individual can only own one ABLE account. In this case, if the grandparents opened an ABLE account for their grandson, the parents or the other grandparents would NOT be able to open a separate ABLE account for him. 
  2. They are allowed up to the $15,000 contribution limit (2019) to fund the ABLE account.
  3. If the balance in the ABLE account exceeds $100,000, the individual's Supplemental Security Income (SSI) eligibility is impacted. 

Another option is to gift the funds directly to the parents and have them specifically earmarked for the benefit of the child.

Should the grandparents have financial wealth, they may want to explore the option of creating a Supplemental Needs Trust and purchasing life insurance on their lives to fund it upon their death(s).  These are only a few common strategies we discuss with families.  There are various strategies and considerations the grandparents can explore with their team of advisors to determine the most appropriate option to gift to their grandchild with special needs.

6. ABLE & 529 Fund Rollovers 

529_plan_529_plans_529_college_savings_plan_1_.55437f836c83bThis provision allows funds in a 529 College Savings account to be rolled over into a 529A(ABLE) account. It is currently set to expire on January 1, 2026. 

  • The ABLE account beneficiary to receive the rollover funds must be either:
    • the beneficiary of the 529 College Savings Account or
    • A "family member" of the beneficiary of the 529 College Savings account
  • The rollover funds are subject to the annual contribution limit of $15,000 for any given tax year, given that no other contributions have been made into the account that year.

Example:  Max, a teenage child just received a diagnosis of autism. When he was born his parents started a college savings fund (529) for him but now it is not known whether he will go to college or not.  An ABLE account may be opened for Max, assuming he meets the criteria, and his parents may now roll over the 529 to an ABLE account without any penalties or taxes due on earnings.

7. Saver's Credit 

Saver's Credit- The Saver's Credit is also known as the Retirement Savings Contributions Credit, was designed to provide an incentive for low and middle income individuals to save. It is currently set to expire on January 1, 2026. 

An ABLE owner contributing to their own account, and meeting the following eligibility requirements, may claim this credit toward taxes owed with the maximum value reducing the taxes owed to zero. The ABLE owner must be:

  • Age 18 or older
  • Not a full time student
  • Not claimed as a dependent on another person's return

Details about the Saver's Credit:

  • Maximum credit is $2000 for an individual and $4000 for a couple
  • Percent of your contribution allowed to take is reduced as your AGI ( Adjusted Gross Income) increases

This chart outlines the credit for each category of tax filer:

Source: the ABLE National Resource Center

2018 Saver's Credit      
Credit rate


filing jointly

Head of 


All Other


50% of your


AGI less than 


AGI less than


AGI less than


20% of your 




$28,501 -




10% of your








0% of your


More than


More than


More than


 Example: You are an ABLE owner working and making $20,000. You have put $2000 into your ABLE account this year.  You can take a credit of 50% of your contribution,  equal to $1000 in this case, to reduce your tax liability. If possible, you can use this $1000 to contribute further to your savings. 

For further information, please contact us or visit the ABLE National Resource Center

8. Assessing Your ABLE Account Investment Choices 

As part of an advisory group implementing the ABLE account in Massachusetts, we learned that many people opening ABLE accounts stopped the application process when they were asked to determine the investment choices for their contributions. This behavior raised a concern that individuals enrolling in the ABLE program might not have the prior experience or knowledge of financial matters to make the best selection for their situation.

Financial Logo-1If you began investing in 2015 when the ABLE was first being offered, unless you withdrew funds for expenses, you most probably never saw your account balances decline in 2016 and 2017. During this period, both the stock and the bond markets experienced positive returns. 

Last year offered a different picture; in 2018 volatility returned to both the stock and bond markets and the returns on your investment, depending on when you put funds in, may have taken a hit.  For investors with little experience, it may be a shock to observe 90 cents where they had invested a dollar a short time earlier.  Regardless of how much money is in the account, it is critical to invest the funds in the ABLE account to meet the goals of the account owner.

Key Considerations for Your Investment Choices

  1. Your asset allocation, or balance between stocks, bonds and money markets, should be based upon your personal ability to withstand a decline in your balance and your tolerance of market volatility .
  2. Your asset allocation should align with the timing of your goals.

If a portion of the funds in the ABLE are being used for transactions, owners should consider investing these monies with very low risk assets. Depending on how the account is being used, the funds should be invested to provide a mix between funding for transactions and growth for the future. This should be a thoughtful and informed evaluation; federal law allows account owners to change investments in their ABLE account twice per year.  Be sure you are comfortable that the money is invested to meet both your short-term needs and your long-term goals. 

Case Study: Paul's ABLE Account Investment Choices

Paul and all other elements of this example are fictitious and all investment results are hypothetical.

Paul is an ABLE account owner. He works and contributed about $5,000 of his earnings to his ABLE account over the course of 2018. Paul was saving money in his ABLE to buy furniture for his apartment, and come September, his parents decided to contribute $10,000 to Paul’s ABLE account. Paul had chosen the a growth portfolio for his ABLE, investing 70% in stocks and 25% in bonds and 5% in money market securities. At the end of the year, the markets had taken a fall and the $15,000 contributed to the account in 2018 was worth only $12,000 ( return is hypothetical). While Paul and his parents believe his account will recover the $3,000 loss over time, he has to rethink and/or postpone the furniture purchase he hoped to make this spring. Since Paul had a near-term use for the funds he invested in his ABLE account, he needed to choose investments that may have offered a lower return but had little to no risk to this principal. He could have chosen the Growth portfolio for a portion of the contributions and kept the remainder in another, more conservative fund or money market.

attainable acct


Fidelity Investment’ s Attainable Portfolios (ABLE) is shown above for illustrative purposes only. Like Paul, many individuals who have opened ABLE accounts may not be overly experienced with investments and should review and reassess their investment choices.