ABLE Age Adjustment Act expands ABLE Account eligibility

On December 23, 2022, Congress passed the Consolidated Appropriations Act of 2023, which contains the SECURE 2.0 Act of 2022 (the “Act”). The legislation was signed into law by President Biden on December 29, 2022. For the Disability community there’s a lot to unpack in the 4,000+ page legislation.

One cause for celebration is the Act’s inclusion of a provision that increases the age-based threshold for contribution eligibility to a tax-favored ABLE (“Achieving a Better Life Experience”) account. For taxable years beginning after December 31, 2025, the age at which a qualified disability must have occurred is increased from age 26 to 46.

What is an ABLE account?

ABLE accounts are designed to enable individuals with disabilities to save and pay for disability-related expenses without jeopardizing eligibility for essential means-tested government benefits, such as Supplemental Security Income (SSI) and Medicaid. Many individuals with disabilities rely on these benefits to maintain their independence. These means-tested benefits have strict limitations on assets — often less than $2,000 in total — that impede them from saving for their futures. The balance in an ABLE account does not count against the total assets measured to determine an individual’s eligibility for these benefits.

Currently, to be eligible to establish an account, an individual must have a qualifying impairment that began before the age of 26.

Who will benefit from increasing the ABLE Account qualifying age from 26 to 46?

• Young adults who have sustained catastrophic injuries or been diagnosed with life-changing chronic conditions, such as immune disorders, neuromuscular diseases or mental illness. The onset of their disabilities often is after the age of 26, denying them the opportunity to sustain employment and independent living in their adulthood.
• American veterans who were injured while in the service of our country. The average age¹ of a service member medically retired due to disability is 34 years old for enlisted members and 39 years old for officers. Additionally, veterans who serve and return home may be diagnosed with chronic conditions that can lead to disability, including post-traumatic stress syndrome (PTSD). Programs for many veterans with disabilities also may be needs-based with asset limitations, such as Veterans Pension benefits, so ABLE accounts can help maintain eligibility in these situations as well. Improving the ability for veterans to save for their futures can mean independence and a successful integration into civilian life and the workforce.
• Individuals with disabilities who are employed. Over 19% of people with disabilities are employed, and this has been trending upward.² Individuals with disabilities who are employed walk a fine line to maintain eligibility for means-tested government benefits, often opting out of valuable employer contributions to retirement plans in order to keep their savings and assets below the threshold. ABLE accounts could help them save for their future goals, including retirement.
• Family caregivers — spouses, aging parents, siblings and loved ones — who provide unpaid care to individuals with disabilities, when their resources are too limited to maintain their independence. As the need for unpaid care continues to grow in the U.S., so does the financial, physical and mental toll that it takes on the family caregivers who are providing that care. Building assets within an ABLE account could be one way to help provide resources for those needing care, instead of relying upon the caregivers to pay out of their own pockets.

ABLE Accounts can help provide a path towards greater economic independence for individuals with disabilities and their families. The National Disability Institute estimates³ that the passage of this provision in the Act increases ABLE eligibility from 8 million to 14 million Americans and allows 1 million more veterans⁴ to participate.

Employers: Learn More About ABLE Accounts in the Workplace