May 14, 2025
Kick the Can Legislation Impacting ABLE Accounts
I had the great opportunity to be present at the National Down Syndrome’s Advocacy Conference on April 28th and 29th to share information with people across the country on financial planning considerations for the Down Syndrome community. One of the pieces of legislation we are currently encouraged to support is a bill called Ensuring Nationwide Access to a Better Life Experience (ENABLE) Act (S. 627/H.R. 1436).
Back in 2017, a frustrated congress put through an end of year tax bill that had a lot of add-ons, including these three details that impact the ABLE account:
- Allows an employed individuals with an ABLE account to save their income up to the poverty limit on top of the standard annual contribution limit when not contributing to a 401k. This is call the ABLE to Work Contribution.
- Allows an ABLE account’s designated beneficiary to claim the saver's credit for their contributions to the account when not contributing to a 401k.
- Allows rollovers up to the unused annual contribution limit of the ABLE ($19k for 2025) from a 529 qualified tuition program account of the designated beneficiary to their ABLE account.
Because these provisions were not made alone but within the one tax bill, they also have the consequence of needing to be renewed. The Tax Cuts and Jobs Act of 2017 in entirety is set to expire at the end of 2025. After that, any provision within it needs to be renewed with new legislation.
At Dependent Financial Planning, we support the ENABLE Act as common sense legislation that will cost very little to the government’s bottom line and encourages the use of ABLE accounts to further the independence of their beneficiaries.
Allowing the ABLE to Work Contribution alone encourages employment of people with disabilities who are beneficiaries of the ABLE accounts. More employment of people with disabilities means less reliance on SSI (which benefit reduces slowly with earned income), and SSDI and Medicaid (as all employed people pay into these systems). Some people will step into fuller participation in competitive employment, and rely only on the supports they need to thrive. Some will receive health benefits through their employer, relying less on their Medicaid health insurance.
As a reminder, an ABLE is a savings account. A Trust is an estate tool. Neither are a plan. When you are ready to understand how an ABLE can fit into your financial plan for you or your loved one with a disability, reach out to our specialized Certified Financial Planning® professionals.