Financial Planning

How Can 529 Able Accounts Benefit Special Needs Families?

By  Brian Thorp

Disclaimer: To make Wealthtender free for our readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a natural conflict of interest when we favor their promotion over others. Wealthtender is not a client of these financial services providers. Learn how we operate with integrity to earn your trust.

529 Able accounts offer tax-advantaged savings for qualified individuals with disabilities. Financial advisors specializing in serving special needs families can help establish and optimize 529 Able accounts to achieve their greatest utility and benefits.

Special needs financial planning involves helping individuals and families whose lives are impacted by disabilities manage their money so they can provide for the lifelong needs of differently abled family members. 529 Able accounts have become a useful tool and an integral part of special needs financial planning.

But what are 529 Able accounts, and how are they best used for maximum benefit? Let’s learn more about this type of account and get answers to questions from financial advisors experienced in serving special needs families.

What is a 529 Able (529a) Account?

In 2014, Congress passed the Stephen Beck Jr. Achieving Better Life Experience (ABLE) Act. It offers a type of tax-advantaged savings account for qualifying disabled individuals and allows them to retain their eligibility for public benefits.

529 Able accounts serve as alternatives to special needs trusts and are administered by each individual state, similarly to 529 college savings plans. They are designed for disabled individuals who are under 26, meet the criteria for SSI or SSDI, and have a disability certification as well as an official diagnosis by a physician. 

As long as the funds are used to pay for certain disability expenses such as education, job training, and healthcare, the money may be withdrawn tax-free. A 529 Able account can accumulate $16,000 per year in 2022 without disqualifying the special needs individual for public benefits. If an Able account exceeds $100,000, however, SSI benefits will be suspended. 

Benefits of a 529 Able Account

A 529 Able account offers a number of benefits, including:

  • Tax Benefits: The money earned in an Able account is not subject to taxes by the state or federal government. Also, any money withdrawn from it will not be taxed if it’s allocated toward Qualifying Disability Expenses. 
  • Allows a Special Needs Child to Receive Federal Benefits: Just like a special needs trust, a 529 Able account will allow you and others to save money for a special needs child’s future without impacting their eligibility for public benefits.
  • Supports a Special Needs Child in an Affordable Way: When comparing the costs of setting up a 529 Able account and special needs trust, an Able account is considerably less expensive. 

How to Set Up a 529 Able Account

If you’re interested in a 529 Able account for a special needs child, be sure to keep the following in mind.

  • Eligibility to Open a 529 Able Account: Make sure you have the right to open a 529 Able account. Generally speaking, you can do so if you’re a parent, beneficiary, or agent that has been designated by a power of attorney. 
  • Online Application Process: All states that offer 529 Able accounts allow you to apply online and receive any assistance you may need by phone or email. Online applications can be found on state-specific Able program websites. 
  • Fees: Each state has its own fees for anyone who wishes to set up an Able account, so it’s important to familiarize yourself with these fees in your specific state. In Ohio, for example, you’ll have to pay $2.50 per month or $30 annually for account maintenance, as well as asset-based fees that range from 0.19% to 0.34%. While Tennessee doesn’t charge fees for account maintenance, the state may take up to 0.63% depending on the investments made.
  • Able National Resource Center: Managed by the National Disability Institute, the ABLE National Resource Center is loaded with information about 529 Able plans. It’s a great resource if you have any questions about the program. 
  • Professional Assistance: While you can go online to research and set up a 529 Able account on your own, it’s wise to consult a financial advisor before doing so. They can inform you of whether it’s a better option than a special needs trust and educate you on the ins and outs of the program as it applies to you. 

💡 In the Q&A below, you’ll gain insights from financial advisors who work with special needs families to help them establish and maintain 529 Able accounts.

🙋‍♀️ Do you have questions not answered below? Use the form on this page to submit your questions, and we’ll update this article with answers from the financial professionals and educators in the Wealthtender community. You can also contact the financial advisors featured in this article directly to set up an introductory call or ask your questions by email.

Q&A: How Can 529 Able Accounts Benefit Special Needs Families

Answers to 529 Able Account Questions with David Alvarez, CFP®

We asked San Antonio-based financial advisor David Alvarez with PAX Financial Group to answer questions about using 529 ABLE accounts based on his experience serving special needs families.

Q: What is a common financial planning challenge unique to special needs families that you frequently encounter where a 529 ABLE account can help?

A family wants to make gifts to their children or grandchildren, and one of them has disabilities. Typically a gift to that family member would endanger their eligibility for government assistance or benefits. A 529 ABLE account will allow that family to make an annual gift up to the individual gift tax exclusion ($16,000 for 2022) for the benefit of that family member, and funds up to $100,000 are generally disregarded when determining eligibility for government assistance or benefits.

Q: When you first speak with a family with special needs, what questions do you like to ask to understand better their circumstances and how a 529 ABLE account may be useful to them?

For the client or individual who wants to set something up: When did they last update their wills? Has a Special Needs Trust been established? Who would you want to act as custodian if something were to happen to you?

Regarding the family member who has special needs: How old are they? Do they work? What is their disability? When did it start? If they are adults, is there a guardianship in place?

Regarding the broader family: How much money are they typically spending on the healthcare or education of that family member? Are there other children? How old are those children? What is the overall family financial picture?

Q: How difficult is it to set up a 529 ABLE account?

529 ABLE accounts, like traditional 529 college savings plans, are operated by the states. Therefore the process of setting one up may be different from state to state.

In the state of Texas, in order to set up a 529 ABLE account, the beneficiary must be a Texas resident, their disability must have been present before age 26, and they must be able to establish that he or she has a disability either by demonstrating their SSI or SSDI eligibility, sharing a physician’s written diagnosis, or having a condition listed on the Social Security Administration’s list of Compassionate Allowances Conditions.

Q: Are there state-specific considerations that impact when and how you may recommend a 529 ABLE account be used?

There are several state-specific considerations.

First, some states with income taxes offer state income tax deductions for contributions to the state ABLE program.

Also, the money earned in an Able account is not subject to taxes by the state or federal government. In a state with a higher income tax, that could represent a 50% savings for any short-term gains or investment interest that would otherwise be taxed as ordinary income.

Finally, some states may file a claim for Medicaid recovery of funds in an ABLE account after the beneficiary dies. Some states MAY NOT file that claim. This could be the difference between a significant benefit passing to future beneficiaries or the account being totally wiped out.  You can visit the ABLE National Resource Center page to see how each state handles the repayment of Medicaid.

Get to Know David Alvarez, Financial Advisor for Special Needs Families:

View David’s profile page on Wealthtender or visit his website to learn more.

Q: Are there circumstances when you feel a 529 ABLE account may not be a good fit for families with special needs?

It often makes sense to compare ABLE accounts with Special (or Supplemental) Needs Trusts (“SNT”). ABLE accounts are easier to set up and manage than SNTs. The funds in ABLE accounts can be accessed easily, and many programs offer a debit card that allows you to pay for items directly from the account.

That said, ABLE accounts come with limits on the amount of money you can contribute each year. SNTs do not have those limits. For families who want to contribute an amount well beyond the annual individual gift tax exclusion, I might recommend a SNT over an ABLE account.

In addition, after the beneficiary dies, any money left in an ABLE account may be used to reimburse the state Medicaid agency for services Medicaid paid for after the ABLE account was created, depending on state regulations. There is often no money left after Medicaid is paid back.

SNTs that were created with a parent, grandparent, or other person’s money (known as a third-party trust) do not have to repay Medicaid after a person dies. For families who are concerned about leaving a legacy beyond the life of the beneficiary, I might recommend a SNT.

Are you a financial advisor who specializes in serving special needs families?

✅ Join Wealthtender and get featured as a specialist financial advisor based on your knowledge and experience. (Subject to availability and terms.)
Sign up today and join financial advisors attracting their ideal clients on Wealthtender
✅ Or request more information by email:

  • This field is for validation purposes and should be left unchanged.

Resources to Help You Choose a Financial Advisor

Top Questions to Ask a Financial Advisor

How Much Does a Financial Advisor Cost?


🙋‍♀️ Have Questions About 529 Able Accounts?


📰 Browse Related Articles



Are you ready to enjoy life more with less money stress?

Sign up to receive weekly insights from Wealthtender with useful money tips and fresh ideas to help you achieve your financial goals.

  • This field is for validation purposes and should be left unchanged.

About the Author
Brian Thorp, Founder and CEO of Wealthtender profile picture

Brian Thorp

Founder and CEO, Wealthtender

Brian and his wife live in Texas, enjoying the diversity of Houston and the vibrancy of Austin.

With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

Connect with Brian on LinkedIn

Disclaimer: To make Wealthtender free for our readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a natural conflict of interest when we favor their promotion over others. Wealthtender is not a client of these financial services providers. Learn how we operate with integrity to earn your trust.