TEN THINGS TO KNOW ABOUT ABLE ACCOUNTS

1. What is an ABLE Account?  ABLE accounts are part of the Federal Tax Code and are also known as “The Steve Beck, Jr. Achieving a Better Life Experience Act.”  New Jersey ABLE account is an investment tool for individuals with disabilities that allows them to save up to $20,000 annually in 2026 without jeopardizing government benefits such as Medicaid and Supplemental Security Income (SSI). 

There can only be one ABLE account per individual.  There can be multiple donors to the one ABLE account.

• Employment.  Under the “ABLE to Work” Act, if an individual is employed, they may be able to contribute additional funds equal to their gross wages or the federal poverty level for a one person household, whichever is less.
• Advantages.  The advantages of an ABE account are:
  • They allow the individual with disabilities to save.
  • Income and capital growth are income tax free.
  • Money in an ABLE account is non-countable for SSI as a resource so long as the balance remains at $100,000 or less.  If the balance exceeds $100,000, the SSI cash benefit may be suspended but Medicaid eligibility continues.  There is a lifetime balance of $305,000.
• Who May Establish an ABLE Account?  An ABLE account may be opened by the eligible individual or an authorized representative.  The following qualify as an authorized representative:
  • A person appointed as a power of attorney.
  • Someone appointed by the court to have financial authority to transact on behalf of the individual, typically a guardian.
• Eligibility.  To be eligible to open a New Jersey ABLE account, an individual must meet the following two requirements:
  • Their disability was present before age 46, and
  • One of the following is true:
    • They are eligible for SSI or SSDI because of a disability, or
    • They experience blindness as determined by the Social Security Administration (SSA), or
    • They have a similarly severe disability with a written diagnosis from a licensed physician.

The Social Security Administration (SSA) definition of disability is: “a severe physical or mental impairment that prevents an individual from doing any substantial work and is expected to last for at least 12 continuous months or result in death.” 

• Qualified Disability Expenses (QDEs). The individual may withdraw funds for a broad expanse of purposes such as housing, education, transportation, medical bills, personal support services, and basic living expenses.  This is part of the appeal of an ABLE account over a Third Party Special Needs Trust.  The individual may withdraw funds without involving a trustee. 

It is good practice to keep receipts for withdrawals.  NJ ABLE will report the total amount of withdrawals to the IRS, and the date and amount of each to the SSA.  Receipt may be necessary to verify the expenses.

• Updating Investments.  Investment options can be changed twice per calendar year.
• Section 8.  The U.S. Department of Housing and Urban Development (HUD) will disregard amounts in the designated beneficiary’s ABLE account.
• ABLE Account and Trusts.  It is possible to have an ABLE account and a Special Needs Trust or a Pooled Trust.
• Payback.  On the death of the designated beneficiary, funds remaining in the ABLE account are subject to a payback to the State of New Jersey.