Six million more Americans just became eligible
Since 2014, ABLE accounts, tax-advantaged savings accounts under Internal Revenue Code Section 529A, modeled on 529 college savings plans, have let people with disabilities save and invest without jeopardizing means-tested benefits like Supplemental Security Income (SSI) and Medicaid. Contributions grow tax-free, and withdrawals used for qualified disability expenses come out tax-free too. Until this year, one requirement kept the accounts out of reach for a large share of people with disabilities: the disability or blindness had to have occurred before the beneficiary turned 26.
Under Section 124 of the SECURE 2.0 Act of 2022, the "ABLE Age Adjustment Act," that threshold rose to age 46 for tax years beginning after December 31, 2025. In practical terms: anyone whose disability or blindness began before their 46th birthday, and who otherwise meets the Social Security Administration's disability standard, can now open an ABLE account, regardless of their current age. Advocacy groups estimate the change makes roughly 6 million more Americans eligible, including a substantial number of veterans with service-connected disabilities that arose well after age 26.
The dollar limits improved at the same time
Two other changes, both enacted through the One Big Beautiful Bill Act, made the accounts more useful just as more people became eligible for them. First, the annual contribution limit, which had always simply tracked the federal gift tax annual exclusion, was decoupled from it: Section 70115 of the OBBBA amended Internal Revenue Code Section 529A(b)(2)(B)(i) to give the ABLE contribution limit its own separate inflation adjustment instead of tying it to the gift tax exclusion under Section 2503(b). The IRS confirmed the result in Revenue Procedure 2025-32: for 2026, the ABLE contribution limit is $20,000, a notch above the $19,000 gift tax annual exclusion that applies to most other gifts.
Second, the OBBBA made permanent the "ABLE to Work" provision, which had been scheduled to expire at the end of 2025. An employed beneficiary who doesn't participate in an employer retirement plan can contribute an additional amount above the standard limit, up to their compensation for the year or the federal poverty line for a one-person household, whichever is less ($15,650 for 2026 in the continental United States). Combined, a working beneficiary can direct up to $35,650 into an ABLE account for the year. The OBBBA also made permanent a beneficiary's ability to claim the retirement savings contributions credit (the "Saver's Credit") on their own ABLE contributions under Section 25B(d)(1)(D), worth up to $1,000 for 2026 for an eligible beneficiary with modest income.
Where this fits alongside a special needs trust
None of this replaces a special needs trust, and it isn't meant to. A properly drafted third-party special needs trust still offers no dollar limit, professional asset management, and, critically, no Medicaid payback provision at the beneficiary's death. An ABLE account, by contrast, is capped at $20,000 in new contributions per year (though the total balance can grow well beyond that), and whatever remains in it when the beneficiary dies is generally subject to a state Medicaid reimbursement claim for benefits the beneficiary received. Trading a trust for an ABLE account isn't the right move for most families with meaningful assets to protect.
Where an ABLE account genuinely helps is in giving the beneficiary more everyday autonomy over routine spending. Balances up to $100,000 in an ABLE account don't count against the $2,000 SSI asset limit, and, unlike SSI's usual treatment of in-kind support a trust pays for directly, ABLE funds the beneficiary spends themselves on food, rent, or other day-to-day needs don't trigger the same benefit reductions. Many trustees find it useful, where the trust instrument and state law allow it, to make periodic distributions from the special needs trust into the beneficiary's ABLE account to cover smaller, discretionary expenses, giving the beneficiary a debit card and some independence, while keeping the bulk of the trust's assets professionally managed and protected from a Medicaid payback claim.
What trustees should do now
If you administer a special needs trust for someone whose disability arose between ages 26 and 46, a category the old rules excluded entirely, it's worth finding out whether an ABLE account is now an option for them. And if the trust already coordinates with an existing ABLE account, this year's higher contribution limit and the newly permanent ABLE-to-Work provision are worth factoring into how much the trust distributes toward it. These distributions still need to be documented properly in the trust's fiduciary accounting and reflected correctly on the trust's own income tax return and the beneficiary's K-1 where the money originates from trust income rather than principal.
Bottom line
The ABLE Age Adjustment Act didn't get the same attention as the OBBBA's headline estate and gift tax changes, but for the families it affects, it opens a genuinely useful savings tool that simply didn't exist for them before. We prepare Form 1041 for special needs and other trusts, and handle the fiduciary accounting behind distributions like these. Reach out if you're weighing how an ABLE account fits alongside a trust you administer.
Have questions about your situation?
Every estate and trust situation is different. Reach out and we'll walk you through what's needed.