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January 21, 2021


Considering a fresh, New Year has finally arrived, there’s no better time to begin planning how to use and fund an ABLE account. Achieving a Better Life Experience (ABLE) Accounts are tax-advantaged, savings accounts for individuals with disabilities. The beneficiary of this type of account is the account owner and income earned by the ABLE accounts are generally not taxable.

Contributions to an ABLE account can be made by any person (the account beneficiary, family, friends Special Needs Trust or Pooled Trust), must be made using post-taxed dollars and will not be tax deductible for purposes of federal taxes. However, some states may allow for state income tax deductions for contributions made to an ABLE account.

For 2021, the maximum contribution from individuals, other than from the account owner, is $15,000. If you are funding an ABLE account on behalf of someone else, here’s a few important points to consider:

  1. Develop a Written Planned Distribution — A planned distribution can be of tremendous value if monies are to be used for multiple purposes. Not only is it a tremendous tool for tracking expenses, this can be an excellent learning experience
  2. Frequency of Distribution — While there is an annual limit, monies contributed to an ABLE account can occur any time during the calendar year.
    1. Lump Sum—Some individuals may be looking to accumulate funds and save in their ABLE accounts. Alternatively, other individuals may intend to use the funds throughout the year and they are more than capable to draw the funds down as needed. Whichever option is chosen, an annual lump sum may be most appropriate.
    2. Monthly or Quarterly Distribution — If the account holder is able to distribute on either a monthly or quarterly basis, this frequency may be ideal considering the autonomy it provides, while keeping some limits. Remember, no matter the amount of the distributions, contributions cannot exceed the amount which has been established by law, and for 2021 this amount is $15,000.
  3. More granular frequency — If the account holder may be struggling with impulse control, you may want to consider distributing more often than monthly and choose to set up a weekly automatic transfer of funds or whatever you determine is suitable.
  4. Rent and Utilities — An account holder can use ABLE funds for qualified disability expenses, which includes shelter costs, without any penalty to public benefits. See SI 01130.740 for further description. If a deposit is made, with the intent of being used for shelter costs and you believe the individual may use the funds for other purposes, consider the timing of such a deposit as well as the frequency, so that these expenses are paid shortly after the receipt of funds. We recommend to turn those funds around quickly and make the shelter payments, before the funds are used for any other purpose. Setting up a written planned distribution to follow can really help with these decisions.
  5. Cash — ABLE funds may also be used in the form of cash, giving the account holder autonomy. Consider the frequency of contribution for this purpose and having a well-planned distribution can make a big difference.
  6. Truelink Prepaid Visa Cards — The Social Security Administration currently recognizes the True Link prepaid card as not counting toward resources, as long as the legal guidelines are followed. Of course, if it is used for shelter or food, it could trigger some loss of SSI benefit. One way around this is to link the True Link card to an ABLE account. ABLE funds are transferred to a True Link card and expenditures are made just as any other prepaid visa card. Refer to for specific programs to see if your plan is eligible.
    1. The first advantage to funding the True Link card from the ABLE account is there are no restrictions on the use of the funds in terms of triggering any loss of public benefit, as long as they are qualified disability expenses. Therefore, just like using ABLE funds for any qualified disability expense, the True Link card is the same because it has been funded by the holder’s ABLE account.
    2. The second advantage is that True Link provides summary data on purchases which can be used to track the planned distribution, thus completing the entire cycle of expense allocation. While your ABLE statement will give you disbursement information, many users find the True Link descriptions easy to read.

Our experienced team of licensed, professional fiduciaries will be happy to provide input on establishing and making contributions to an ABLE account, so please feel free to reach out to call us at 949-200-9712 or email us at to learn more about this tax-advantaged opportunity.

Author: Lee Ann Hitchman, CLPF/MBA and Licensed Professional Fiduciary