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What’s a 529A Plan?

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The Achieving a Better Life Experience (ABLE) Act amends Section 529 of the Internal Revenue Service Code to create tax-free savings accounts for eligible individuals with disabilities. Learn about the origins of 529A accounts, also known as ABLE accounts.

Establishment of Section 529  

The federal government established 529 savings plans – investment accounts with tax advantages – in 1996 through Section 529 of the U.S. Internal Revenue Code. Federal law authorizes 529 plans and states generally administer the programs.

529 plans became a popular savings option. Today, 49 states and the District of Columbia offer 529 plans. More than two million students have used 529 programs to help pay for their college education.

Seeking Solutions for Disability-Related Expenses

In the early 2000s, a group of Virginia parents recognized an inequity. They could save in a 529 college savings account for a child without disabilities. However, they could not save money for a child with disabilities without impacting essential services and supports. Many of these public benefits require meeting a means or resource test that limits the eligibility of individuals who report more than $2,000 in assets.

These families wanted to help all their children establish savings to reach their future goals. What if there was a tax-advantaged savings option similar to 529 accounts, but specifically designed to empower people with disabilities to achieve a better life experience by saving for qualified disability expenses without impacting their eligiblity for benefits?

Launch of 529A Plans and ABLEnow

The idea for ABLE accounts became a decade-long, cross-disability advocacy effort that received strong political support across party lines. The Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act of 2014 amends Section 529 of the Internal Revenue Service Code to create tax-free savings accounts for eligible individuals with disabilities. These transformative accounts are known as 529A accounts or ABLE accounts.

The federal legislation opened the door for ABLE programs, which must be set up and administered by a state. In 2015, Virginia became the first state in the country to pass ABLE legislation after the federal ABLE statute passed.

This state legislation authorized development of the Virginia-sponsored ABLE program, ABLEnow. And thanks to a 2015 amendment of the ABLE Act eliminating a state residency requirement, ABLEnow accounts became available to eligible individuals in all U.S. states in 2016.

Eligible individuals can open an ABLEnow account online today.

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