Preferred Savings Plans

ABLE accounts are a good tax-preferred savings plan for the disabled. These state-run accounts let people make nondeductible contributions of up to $20,000 in 2026 to help the disabled maintain their health, independence and quality of life. Lifetime pay ins are capped at the same level as the state’s 529 plan. ABLE accounts can be opened for people who become blind or disabled before age 46. (Note that the SECURE 2.0 law raised the age from 26 to 46, beginning in 2026.) Disabled working individuals can open their own ABLE accounts and can make pay ins to the accounts over the $20,000 annual pay in cap. This additional yearly contribution is limited to the poverty level for a single person. These extra contributions can qualify for the saver’s tax credit, provided all the requirements for this credit are satisfied. Tax-free rollovers to an ABLE are allowed from a beneficiary’s or sibling’s 529 plan. ABLE account owners remain eligible for Medicaid, and balances of $100,000 or less do not affect their eligibility for Supplemental Security Income benefits.

Payouts of earnings from ABLEs are tax-free if used for qualified purposes… housing, transportation, job training, education, health needs, personal support, assistive technology, financial and administrative services, legal fees and the like. Earnings used for non-qualified purposes are taxed and hit with a 10% fine.