1.6.3. ABLE Programs
An Achieving a Better Life Experience (ABLE) program is a state-managed, tax-advantaged savings program for disabled individuals. In many ways, ABLE programs are similar to 529 education savings plans. They get their tax advantages from federal legislation, but the law left it to each state to create its own program, and as a result the programs are subject to MSRB rules. ABLE programs have only been around since 2016, and as of this writing only 35 states have them. However, many states allow nonresidents to use their ABLE programs, so as a practical matter they are available nationwide.
As with a 529 education savings account, contributions to an ABLE account are made with after-tax dollars (in other words, the contributions aren’t tax-deductible). Withdrawals are exempt from federal income tax if they are used for expenses related to the beneficiary’s disability. The tax status of contributions and withdrawals at the state level varies by state. Contribution limits are the same as for the state’s 529 savings plan. Contributions can be made by anyone, but are subject to the gift tax. Investment options may be changed twice per calendar year.
However, ABLE accounts also have some unique features. F