Last week, the IRS lifted restrictions on ABLE accounts, making these tax-free savings accounts easier to open, operate, and use.
Hand dropping money into a piggy bank
Credit: Hand dropping money into a piggy bank

ABLE accounts are tax-free savings accounts, a bit like 501c College Funds, that allow people with disabilities to save up to $100,000 without losing government benefits. These accounts were created last year under the Achieving a Better Life Experience Act, and the hope was that they'd relieve some of the financial strain many people with special needs face. However, disability advocates and state officials were concerned that strict IRS restrictions would hinder their effectiveness.

Luckily, the IRS lifted some of its regulations last week, and made three important changes to ABLE account rules.

According to the IRS guidance:

  • No medical documentation of a diagnosis is needed to open an ABLE account, though individuals will have to certify under penalty of perjury that they have a qualifying one.
  • Categorizations of distributions is not needed, meaning that when an individual needs money for a housing or medical expense, they can withdraw it and then use it for other expenses that come up beyond just housing or medical.
  • Contributors Taxpayer Identification Numbers are not needed.

These may seem like small changes, but they will allow state officials to administer programs more easily and they will allow account holders to have less hurdles to overcome when saving money or using it for expenses.

ABLE accounts are state regulated, and right now 34 states are working to get them up and running. For more information about ABLE accounts, check out the National Down Syndrome Society's very helpful guide "ABLE Accounts: 10 Things You Must Know."

Jamie Pacton lives near Portland where she drinks loads of coffee, dreams of sailing, and enjoys each day with her husband and two sons. Find her at and Twitter @jamiepacton.