Annual Contribution Ceiling for ABLE Accounts Rises and More States Add Programs

The maximum amount that can be contributed each year to an ABLE account for a person with disabilities rose $1,000 to $16,000 on January 1, 2022.  The figure, which is tied to the inflation-adjusted value of the IRS’s gift tax exclusion, had been stuck at $15,000 since 2018.  Meanwhile, all but four states now offer ABLE programs.

Congress passed the Achieving a Better Life Experience (ABLE) Act in 2014, amending the Internal Revenue Code to allow families to create new tax savings plans, modeled after the popular 529 savings plans for higher education, that allow money to be set aside for or a person with special needs to pay for disability related expenses. This money can grow tax-free over time and is used to pay for qualifying expenses toward the care and support of the special needs beneficiary. Money in an ABLE account is intended for the care and support of the person with special needs. Qualifying expenses include housing, transportation, assistive technology, health care, and employment support.

These accounts are administered by the individual states and accept contributions in the form of cash only (not bonds, securities, real estate, or other assets).  A major benefit of ABLE accounts is that the beneficiary can manage and control them once he or she comes of age.

People with disabilities who are employed can save even more beyond the $16,000 limit in an ABLE account, up to the federal poverty level for a single individual. This means that those in the lower 48 states can invest an additional $12,880 this year.  Hawaii residents can save an extra $14,820 and the figure is $16,090 in Alaska.

However, the total amount that can be held in an ABLE account without jeopardizing government benefits like Supplemental Security Income (SSI) remains at $100,000. For individuals who are not receiving such means-tested benefits, the maximum account limit is tied to the account limit for the particular state’s 529 programs, which in 2022 can range from $300,000 to $517,000.

As of January 2022, 46 states and the District of Columbia had set up ABLE programs, although if your state does not yet have its own program, many state programs allow out-of-state beneficiaries to open accounts. The newest states to add programs are Connecticut and Utah. Four states – Idaho, North Dakota, South Dakota and Wisconsin — do not yet have active ABLE programs, according to the ABLE National Resource Center. The program in New Jersey is called NJ ABLE, and the website for more information can be found here: NJ ABLE. For a directory of state programs, click here.

The Vanarelli website blog has numerous articles discussing ABLE accounts and Special Needs Trusts. The articles can be accessed here.

(This article is adapted from an article on the Academy of Special Needs Planners (ASNP) website. Mr. Vanarelli is a founding member of ASNP. ) 

For additional information concerning special needs trusts and disability planning, visit:

NJ Special Needs Trusts and Disability Planning