16.7. ABLE Accounts

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 college 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 college 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 beneficiar