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Chapleau Law Group

Trusted Counsel to the 529 and ABLE Program Communities



ABLE stands for the Achieving a Better Life Experience Act of 2014, (the “ABLE Act”). The ABLE Act, which was enacted by Congress and signed by the President in December 2014, authorizes states to create a federal tax-advantaged savings vehicle for the benefit of individuals with disabilities.

Eligible Individual.

Under the ABLE Act, a qualified ABLE program is a program established and maintained by a state or instrumentality whereby contributions may be made to an account established for the purpose of meeting the qualified disability expenses of the beneficiary of the account.

The owner of an ABLE account must be the beneficiary of the account. The beneficiary, in turn, must be an Eligible Individual. An Eligible Individual is an individual for whom 1) a disability certification has been filed with the Secretary of the Treasury for the taxable year, or 2) meets the definitions of disability or blindness under the Social Security Disability Insurance or Supplemental Security Income programs. It is important to note that the blindness or disability must have occurred prior to the individual reaching the age of twenty-six (26). In order to be eligible for favorable tax treatment under ABLE, a beneficiary may only have one ABLE account.


Contributions to ABLE accounts may be used to pay for qualified disability expenses which include education, transportation, employment training and support, financial management and administrative services, housing, legal fees, health, prevention and wellness, expenses for oversight and monitoring, assistive technology and personal support services, funeral and burial expenses, and other expenses adopted by IRS regulation.

Contributions to ABLE accounts are subject to an annual and an aggregate contribution limit. The annual contribution limit is tied to the annual individual gift tax limit which is $14,000 as of the date of this writing. The aggregate contribution limit is tied to the aggregate contribution limit in place for the applicable state’s 529 college savings program, which varies from state to state but currently ranges from $235,000 to $452,000. An important distinguishing feature of ABLE accounts is that contributions of up to $100,000 are disregarded for purposes of determining the beneficiary’s eligibility for SSI benefits.


Tax-free withdrawals may be made from ABLE accounts for qualified disability expenses. Withdrawals made for non-qualified expenses are subject to taxation at ordinary income tax rates plus a ten percent (10%) additional tax.

IRS Guidance. On March 23, 2015, the IRS issued Notice 2015-18 acknowledging that some ABLE programs may be in operation before regulations or other IRS guidance can be issued. To prevent states from being discouraged from enacting ABLE legislation and creating ABLE programs, the IRS assured states that enact such legislation, as well as individuals who establish ABLE accounts under the legislation, that they will not fail to receive the benefits of the ABLE Act merely because the legislation or the account documents do not fully comply with the guidance when issued. The Notice also assures states and taxpayers that transition relief will be provided with regard to changes necessary to align ABLE programs with the subsequent guidance. As of this writing, the timing and final form of the IRS guidance remains uncertain.

Future Developments.

As of this writing, over forty (40) states have introduced ABLE bills and at least ten (10) states have passed ABLE legislation. There is still considerable work to be done before ABLE Plans can be launched and disabled individuals can start saving through this new vehicle. State officials or agencies authorized to administer the Plan will have to set up the ABLE Plans for launch, which may include contracting with third parties to manage the investments and operation of the plans.

While some questions remain regarding the application of the ABLE Act to the day-to-day operations of the Plans, I anticipate that these outstanding issues will be analyzed and constructively addressed in the coming months by Plan administrators and legal counsel. The transition relief promised in IRS Notice 2015-18 should mitigate the risk that would otherwise be inherent in proceeding in the absence of definitive IRS guidance.

Mr. Chapleau is a frequent speaker at national conferences on ABLE Program legal issues.