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The Short Answer

For People With Disabilities, ABLE Accounts a Step Toward Independence

Though not the perfect fit for every situation, ABLE accounts represent important progress for people with disabilities.


An ABLE account is a tax-favored way to save for the needs of a person living with a disability. It is built on same the legal framework as 529 college savings plans, and it works in a similar way. Contributions are made with aftertax dollars to a plan with a preset menu of investment choices. Earnings compound on a tax-free basis, and withdrawals to pay for qualified expenses are tax-free, too. 

The bill was first signed into law by President Barack Obama in December 2014; since then, six states have rolled out ABLE account plans. Five of these state plans offer enrollment to out-of-state residents, which means even if your state doesn't offer its own ABLE account, you can still set up an account. (It could pay to check into whether your home state has a program or has one in development, particularly if there is a state tax benefit for contributing.)

Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.