November 3, 2020 10:47 pm

ABLE Account Rules Clarified

Achieving a Better Life Experience (ABLE) Accounts was added to the law in 2014 to enable tax-free savings accounts to be set up for people with disabilities that occur or occurred before age 26 that would not prevent them from qualifying for government assistance programs (e.g., Medicaid). Generally, these accounts allow annual contributions up to the gift tax exclusion (e.g., $15,000 in 2020). Then the Tax Cuts and Jobs Act modified the rules to allow additional contributions under certain circumstances. Now final regulations provide guidance to individuals as well to states and their agencies offering such accounts (T.D. 9923). Some of the guidance to beneficiaries is discussed below; instructions to states are not covered here.

Each eligible beneficiary is allowed to have only one ABLE account at a time.  Previously there had been a residency requirement that barred a beneficiary from having an ABLE account in another state. The residency requirement was eliminated so that a beneficiary may have an ABLE account in any state. However, states are not required to establish or participate in an ABLE program, and participating states are permitted to restrict their ABLE account programs to state residents.

If the beneficiary of an ABLE account has legal capacity, he or she may designate another person to have signature authority over the account. In fact, there can be co-signatories for the account so that if one has refused to serve, the other can do so.

ABLE accounts can be rolled over from one program to another. Regulations make it clear that this does not have to be done through a direct program-to-program transfer.

For more information, including comparisons of state programs, visit the ABLE National Resource Center at

Tax Glossary

Qualified tuition program (QTP)

A state-sponsored college savings plan or prepayment plan, or a prepayment plan established by a private college.

More terms