ENABLE Act Permanently Boosts ABLE Account Contributions and 529 Rollovers, Enhancing Financial Security for People with Disabilities

The Ensuring Nationwide Access to a Better Life Experience (ENABLE) Act is pretty straightforward, but it packs a punch for people with disabilities and their families. This bill makes two key changes to ABLE accounts, which are tax-advantaged savings accounts for individuals with disabilities, permanent.

Making Savings Easier: What's an ABLE Account?

Before diving in, let's quickly recap what an ABLE account is. Think of it like a 529 college savings plan, but instead of education, it's for disability-related expenses. This can include anything from housing and transportation to assistive technology and healthcare. The big win? Money in an ABLE account grows tax-free, and it generally doesn't count against you when applying for needs-based government benefits like SSI or Medicaid (up to a certain limit, usually $100,000).

Unpacking the Changes: Contributions and Rollovers

1. Higher Contribution Limits – For Good

• What's Changed: The ENABLE Act permanently extends the increased contribution limits to ABLE accounts. Previously, there was a limit on how much extra an ABLE account beneficiary (the person with the disability) could contribute above the standard annual limit (which is tied to the gift tax exclusion, $18,000 in 2024). If the beneficiary was employed, they could contribute an additional amount up to the poverty line for a one-person household or their gross income, whichever is less. This extra contribution was set to expire on January 1, 2026, but the ENABLE Act removes that expiration date (Section 2).
• Real-World Impact:
  • Example: Imagine Sarah, a graphic designer with a disability, who has an ABLE account. With the increased contribution limits, she can put more of her earnings into her ABLE account each year, tax-free, to save for a down payment on an accessible home or future medical expenses.
• The Bottom Line: This lets individuals with disabilities build up their savings faster and have more financial security for the long haul.

2. 529 to ABLE Rollovers – No More Time Limit

• What's Changed: The bill makes it permanently okay to roll over money from a 529 college savings account into an ABLE account (Section 3). There used to be an expiration date on this ability, but now it's a permanent feature.
• Real-World Impact:
  • Example: Let's say a family set up a 529 account for their child, who was later diagnosed with a disability. They can now move those 529 funds into an ABLE account without penalties or time constraints. This gives families more flexibility in how they use those savings.
• The Bottom Line: This provides a safety net for families whose plans might change due to a disability diagnosis, allowing them to repurpose existing savings.

Bigger Picture and Potential Issues

This bill is all about making it easier for people with disabilities to save and manage their finances. By making these ABLE account provisions permanent, it gives individuals and families more certainty and flexibility. It also simplifies the tax code a bit by removing some temporary rules. The changes in the ENABLE Act apply to taxable years ending after the date the bill is enacted, so if it passes, the benefits would kick in relatively quickly.

While the bill is focused on helping people with disabilities, it's worth noting that the benefits might be more readily accessible to those with higher incomes. People who can afford to contribute more to ABLE accounts, or who already have 529 savings, will be in a better position to take advantage of these changes. However, the overall goal is to provide more financial tools for individuals with disabilities, which is a step in the right direction.