What is the ABLE Act?
Signed into law in December 2014, the Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act authorized states to establish tax-advantaged savings programs for individuals with a disabilities. The ABLE Act is considered the most significant federal legislation addressing the needs of persons with disabilities since the Americans with Disabilities Act passed more than 25 years ago.
In 2015, Virginia became the first state to approve and pass ABLE legislation after passage of the federal ABLE Act. This was particularly poignant because the idea for the ABLE Act was originally conceived by a group of Virginia parents. The Virginia ABLE bill directed Virginia529 to develop, implement and administer a new savings program for eligible individuals with disabilities and their families.
What is "529A?"
The ABLE Act created Section 529A of the Internal Revenue Code. This is the federal legal framework that establishes the specific rules and requirements of an ABLE account.
What is an ABLE account?
ABLE accounts are tax-advantaged savings accounts for eligible individuals with disabilities.
Why the need for ABLE accounts?
Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care, food and housing assistance. Many of these benefits require meeting a means or resource test that limits the eligibility of individuals who report more than $2,000 in cash savings, retirement funds and other items of significant value.
For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability. ABLE accounts allow Eligible Individuals the opportunity to save and fund a variety of Qualified Disability Expenses without endangering eligibility for certain benefits that are critical to their health and well-being, such as Medicaid and Supplemental Security Income (SSI).
What is ABLEnow?
ABLEnow is a national ABLE savings program offered by the Commonwealth of Virginia.
ABLEnow is administered by Virginia529, the country’s largest college savings plan, which now has an expanded mission to meet the needs of individuals with disabilities.
What is ABLEAmerica?
ABLEAmerica is ABLEnow’s partnership with Capital Group, home of American Funds, one of the oldest and largest mutual fund companies in the country. Work with your financial to reach your ABLE savings goals.
Who is eligible to open an ABLEnow account?
ABLEnow accounts are available to eligible U.S. citizens and legal residents, regardless of state residency. An “Eligible Individual” is someone who developed the onset of their disability before age 26, and:
- Is entitled to benefits like Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) based on blindness or disability under Title II or XVI of the Social Security Act; or
- Self-certifies that they have a condition listed on the Social Security Administration’s List of Compassionate Allowances Conditions and have a signed qualifying disability diagnosis from a qualified physician; or
- Self-certifies that they have an eligible disability and have a signed qualifying disability diagnosis from a qualified physician.
To open an account based on self-certification, the individual must have a signed doctor’s diagnosis of blindness or of a physical or mental impairment which results in “marked and severe functional limitations” lasting for a continuous period of 12 months or longer or which can be expected to result in death. Though the signed diagnosis from the doctor does not need to accompany the ABLEnow account application, it must be readily available for verification. You may use this optional Physician Diagnosis Form (pdf) to obtain a written diagnosis for your records.
Both physical and mental disabilities may qualify someone to open an ABLEnow account. To see if you or someone you know is eligible, take our Eligibility Quiz
How do I prove my eligibility?
Our enrollment process is entirely online. You will not need to produce a copy of your diagnosis in order to open an ABLEnow account. However, a record of your eligibility or diagnosis must be readily available for verification.
You may use this optional Physician Diagnosis Form (pdf) to obtain a written diagnosis for your records.
I am older than age 26. May I open an ABLEnow account?
To qualify for an ABLE account, an individual must have developed the onset of their disability before their 26th birthday. However, an individual older than age 26 may open an ABLEnow account.
Do I need to live in Virginia to open an ABLEnow account?
No. ABLEnow accounts are available to eligible U.S. citizens and legal residents, regardless of state residency.
Qualified Disability Expenses
How can I use the money in my ABLEnow account?
Money in your ABLEnow account may be used to pay for Qualified Disability Expenses. An expense is “qualified” if:
- You incurred the expense at a time you were considered an “Eligible Individual;”
- The expense relates to your blindness or disability; and
- The expense helps you maintain or improve your health, independence or quality of life.
Each person is unique and the needs of individuals can vary depending on the disability, circumstances and specific treatment.
What are some examples of Qualified Disability Expenses?
- Employment training and support
- Assistive technology and related services
- Prevention and wellness
- Financial management and administrative services
- Legal fees
- Expenses for oversight and monitoring
- Funeral and burial
- Basic living expenses
- Other expenses approved by the Secretary of the U.S. Treasury
Do withdrawals require approval from ABLEnow?
No. Money may be withdrawn from an ABLEnow account at any time and for any reason.
How do I prove that I am spending my money on Qualified Disability Expenses?
It is up to you to track how you spend the money in your ABLEnow account.
Each year, ABLEnow will report the total amount of distributions to the Internal Revenue Service (IRS) as part of annual tax reporting. The IRS may investigate the distributions from an ABLEnow account to determine whether a withdrawal was for a Qualified Disability Expense.
In addition, ABLEnow will report to the Social Security Administration the date and amount of each distribution from an ABLEnow account. If the individual with a disability receives Supplemental Security Income (SSI) or Medicaid, the Social Security Administration may investigate any distribution to determine whether the withdrawal was for a Qualified Disability Expense.
For this reason, we strongly recommend that you keep records and receipts on how you are spending the money in your ABLEnow account.
What if I use the money in my ABLEnow account for something that is not a Qualified Disability Expense?
If money is withdrawn from an ABLEnow account to pay a non-qualified expense, the earnings portion of the withdrawal will be treated as income, taxed at the designated beneficiary’s tax rate, and will be subject to a 10% federal tax penalty. In addition, any state tax deductions or credits taken in previous years related to contributions may need to be recaptured. Please check your state tax department for more information on recapture requirements.
Additionally, any non-qualified funds you withdraw could be counted against you for purposes of determining your eligibility for means-tested public benefits programs.
Opening an Account
Who can open an ABLEnow account?
The Eligible Individual may open an ABLEnow account independently if they are over the age of 18.
If the Eligible Individual is a minor under the age of 18, a parent must open the ABLEnow account as the Authorized Representative.
If the Eligible Individual cannot open the account, or would prefer to have assistance, an individual authorized to act on his or her behalf (a Parent, Legal Guardian or an Attorney in Fact acting under a Power of Attorney) may open and manage the account as the Authorized Representative.
How do I open an ABLEnow account?
Open an ABLEnow account online at able-now.com. Simply complete and submit the application by following the step-by-step instructions.
You will receive an email confirming that your account is open, as well as information on contributing and managing your ABLEnow account.
What information and documentation must I provide to open an ABLEnow account?
For the Eligible Individual with a disability, the following is required:
- Personal information: name, date of birth, address, Social Security Number, email and phone
- Basis of eligibility under the ABLE Act
- Category of disability under the ABLE Act
If a person other than the Eligible Individual with a disability is opening the account, the following additional information is required from the Authorized Representative:
- Relationship to Account Owner
- Personal information: name, date of birth, address, Social Security Number, email and phone
During enrollment, Legal Guardians and Attorneys in Fact acting under Power of Attorney will be required to upload the appropriate legal documentation electronically before being able to contribute or distribute funds from an ABLEnow Account or use the ABLEnow Card.
- Legal Guardian: Submit a copy of the court order or other documentation issued by your state of residence establishing legal guardianship over the Person or Estate/Property of the Designated Beneficiary.
- Power of Attorney: As an individual who has been granted authority under a Durable General Power of Attorney, submit a copy of the document that grants you the legal authority/powers to manage the banking and other financial institution transactions of the Designated Beneficiary.
How much does it cost to open an ABLEnow account?
There’s no enrollment fee to open an ABLEnow account.
Is there a minimum amount I have to contribute?
There is no minimum initial contribution amount or minimum subsequent contribution amount.
Are there fees associated with maintaining an ABLEnow account?
There are minimal costs associated with maintaining your account, and ABLEnow offers some of the lowest fees in the country among ABLE programs.
The monthly account service fee is $3.25. If the Account Owner or Authorized Representative chooses to invest some of the funds in the ABLEnow account, there are also asset-based fees between 0.37% and 0.40%, depending on investment selections.
There may be other fees (such as a returned check fee) based upon account activity. See the Account Fee Schedule for details.
May I open more than one ABLE account?
No. Eligible Individuals may only have one ABLE account at any time.
How do I transfer funds directly from another ABLE program into ABLEnow?
To transfer (rollover) your ABLE account from another state’s program to ABLEnow, open your ABLEnow account online at able-now.com. Complete and submit the Direct Program-to-Program Transfer Request Form following the form’s step-by-step instructions.
Can a Social Security Representative Payee open my ABLEnow account?
If you’re an Eligible Individual with a Representative Payee, you may open an ABLEnow account for yourself. If you would prefer to have assistance, a Legal Guardian or an Attorney in Fact acting under a Power of Attorney may open and manage the account as the Authorized Representative.
To have a Representative Payee open or manage an account for you, they must meet the requirements of an Authorized Representative (as the parent of a minor, Legal Guardian or an Attorney in Fact acting under a Power of Attorney). Because the role of Representative Payee is specific and unique to Social Security benefits, it doesn't apply to ABLE programs.
Can I open an account through my financial advisor?
ABLEAmerica is ABLEnow’s partnership with Capital Group, home of American Funds, one of the oldest and largest mutual fund companies in the country. Work with your financial adviser to reach your ABLE savings goals.
Contributing to an Account
How can I contribute to my account?
Contributions may be made to an ABLEnow account online or by check. You can save your bank account information and set up recurring contributions.
Is there a limit to the amount of money that may be contributed to an ABLEnow account?
Annual contributions to an ABLE account are currently limited to $15,000. This amount is tied to the federal annual gift tax exclusion limit and may be adjusted periodically to account for inflation.
Working account owners who do not participate in an employer-sponsored retirement plan may be eligible to contribute above the annual ABLE contribution limit. Learn more about the ABLE to Work Act.
The cumulative ABLEnow account value limit is currently $500,000.
Who can contribute to an ABLEnow account?
Anyone may contribute to an ABLEnow account, including the account owner, family and friends.
Can my family and friends make gifts into my ABLEnow account?
Yes. Contributions from family and friends made directly into an ABLEnow account are not considered income to, or assets of, the individual with a disability when determining eligibility for certain disability benefit programs. This means that family and friends can provide financial assistance without endangering eligibility for benefits critical to the health and well-being of many with disabilities.
Withdrawing from an Account
How do I access money in my ABLEnow account?
You can use your ABLEnow account to pay for Qualified Disability Expenses in the way that’s easiest for you:
- Present your ABLEnow Card at the point of sale.
- Use the online account portal to transfer funds from your ABLEnow account to a personal bank account.
- Use online bill pay to pay a provider directly.
ABLEnow accounts may be used to pay a variety of Qualified Disability Expenses related to maintaining the Eligible Individual’s health, independence and quality of life. See the Qualified Disability Expenses section for more information.
What is the ABLEnow Card?
ABLEnow account holders receive the ABLEnow Card—a debit card providing a simple, fast way to pay for Qualified Disability Expenses. There is no additional cost for the ABLEnow Card.
One ABLEnow Card will be issued upon establishment of the ABLEnow account. You may request up to one additional card issued to the person of your choice (“Authorized User”).
When will I receive my ABLEnow Card?
Your ABLEnow Card should arrive to the address on record within seven to ten (7-10) business days of the ABLEnow account being established.
What are the tax advantages of an ABLEnow account?
Earnings grow free from federal taxes. In addition, states may offer state tax incentives. For example, in Virginia, earnings grow free from federal and state taxes. Virginia also offers an annual state income tax deduction of up to $2,000 per contributor for contributions to an ABLEnow account.
Are there special tax advantages for Virginia taxpayers?
Yes. Because ABLEnow is the Virginia-sponsored ABLE savings program, there are tax advantages for Virginia taxpayers. In Virginia, earnings grow free from both federal and state taxes. Virginia also offers an annual state income tax deduction of up to $2,000 per contributor for contributions to an ABLEnow account.
Saving and Investment Options
How do saving and investing work in the ABLEnow program?
ABLEnow makes it easy to save and invest at your own pace. The first $2,000 in your ABLEnow account will be automatically allocated to the FDIC-insured ABLEnow Deposit Account, which is linked to your ABLEnow Card.
Once the balance in the ABLEnow Deposit Account exceeds $2,000 (or a higher amount set by the Account Owner or Authorized Representative), you may opt to invest additional contributions into one or more investment portfolios.
What are the investment options offered by ABLEnow?
Account Owners or their Authorized Representative may choose from four investment portfolios. You may choose to invest in one investment portfolio or allocate between or amongst the portfolios offered.
Each portfolio option is intended to address a different investment strategy and risk tolerance:
- Aggressive Growth
- Moderate Growth
- Conservative Income
- Money Market
To view details on these investment options, visit the Investments page.
How do I select investment options for my ABLEnow account?
Account Owners or their Authorized Representative can set up an investment profile and choose their funds through the online account portal. After logging in, click “Accounts” in the top navigation bar. If you have not yet established your investment elections, you will see the “Investment Account Setup” button at the top right of the page. Click this button for a step-by-step guide to set up your Investment Account.
May I change or update my investment selections?
Yes, federal rules allow you to change your investment selections twice per calendar year.
Impact on Disability Benefits
Will the money in my ABLEnow account affect my eligibility for federal means-tested benefits?
An ABLEnow account is disregarded when determining certain federal benefit eligibility with the following two exceptions for individuals receiving Supplemental Security Income (SSI):
- For the purposes of determining eligibility for SSI, money in an ABLEnow account in excess of $100,000 is considered an asset to the individual with a disability and may cause SSI benefits to be reduced or suspended. An account balance up to and including $100,000 is disregarded.
- A withdrawal that will be used for a housing expense but that is not spent in the same calendar month will be considered an asset of the individual with a disability and may cause SSI benefits to be reduced or suspended.
There is no impact on Medicaid benefits, regardless of how much money is in the ABLEnow account.
Will the money in my ABLEnow account affect my eligibility for state means-tested benefits?
ABLEnow is the Virginia-sponsored ABLE savings program. An ABLEnow account is disregarded when determining eligibility to receive benefits provided by the Commonwealth of Virginia.
Residents of states other than Virginia should check with their state benefits agencies to determine if an ABLEnow account will affect any state-based disability benefits.
Do I have to receive disability benefits to be eligible for an ABLEnow account?
No. An individual does not need to receive disability benefits to be eligible to open an ABLEnow account. See the Eligibility section for more information.
Can an individual with a disability work and have an ABLEnow account?
Yes, an individual with a disability can work and have an ABLEnow account as long as the individual meets the Eligibility requirements for ABLEnow.
Can I have an ABLEnow account and a Special Needs Trust?
Yes, you can use your ABLEnow account in conjunction with other types of trusts and accounts.
Determining which option is the most appropriate will depend upon individual circumstances. For many individuals and families, it may make sense to have both an ABLE account and a special needs trust.
Can I make a tax-free transfer of funds from an existing 529 college savings account to an ABLEnow account?
Yes, families who have a 529 college savings plan can transfer funds to an ABLEnow account without incurring any tax or penalty. The rollover can be in amounts up to the annual ABLE contribution limit. Both accounts must have the same beneficiary or be a qualifying member of the beneficiary’s family. For more information on who is a qualifying family member, please see the Program-to-Program transfer or Contributions form.
What happens to the money in my ABLEnow account after my death? Is there a Medicaid payback?
If you received Medicaid benefits during the time you had your ABLE account open, Medicaid can file a claim for some amount of repayment upon death. Before that happens, the account balance can be used by the Account Owner’s estate to repay any outstanding Qualified Disability Expenses, including funeral and burial costs.