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Answers at your fingertips

You can scroll through the FAQs or click on a category below to scroll to that section of the page.

How do I prove an eligible expense?

We don’t need proof of your expenses, but you should have it for your records as the IRS may require you to provide proof of qualified disability expenses in the case of an audit.

Can money in my ABLE account be recovered in a bankruptcy?

No. The ABLE account is protected from bankruptcy.

Can I use funds to pay for housing or rent?
You can use money from an ABLE account for housing expenses. If you’re eligible for Supplemental Security Income (SSI), the money must be used within the month it was withdrawn so it doesn’t count as income for the month in determining your SSI eligibility. Plus, having an ABLE account doesn’t... Read more
What happens if I withdraw money for a non-eligible expense?
You’ll have to pay taxes on any non-eligible expense, plus a 10% penalty on the earnings portion of the withdrawal. A withdrawal used for a non-eligible expense, or for housing expenses even if they are qualified disability expenses, could affect your eligibility for Supplemental Security Income... Read more
Can I use ABLE funds to pay for a vacation?

Maybe. Qualified disability expenses may differ from beneficiary to beneficiary depending on their disability. A vacation could qualify as an eligible expense if it maintains or improves the health, independence, or quality of life of the person living with a disability.

What is considered to be a “qualifying expense”?
A "qualified disability expense" means any expense related to the beneficiary as a result of living a life with disabilities. These may include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial... Read more
Can out-of-state contributors receive tax deductions?

Some states offer parity, meaning that the contributor’s state of residence may offer a state deduction for putting money into another state’s plan. It would be dependent upon each state’s individual program.

Are there any federal tax deductions for ABLE contributions?

No, the federal tax benefit is the fact that the account grows tax free, eliminating the need to pay capital gains on the money accruing in your account.

Does Alabama allow a tax deduction for contributions?
Yes. For Alabama state income tax purposes, a deduction is allowed up to $5,000 per taxpayer per year for contributions. This deduction is increased up to $10,000 for married taxpayers filing a joint return where both taxpayers make such contributions. The deduction may include monies rolled... Read more
What are the tax laws that govern ABLE accounts?

The ABLE Act was modeled after the 529 college savings tax code. The ABLE Act adds ABLE Accounts under Section 529A of the IRS tax code.