A Comprehensive Look at a Powerful Tool for Disability Planning

ABLE accounts are a crucial resource for families with disabilities, allowing them to save and invest for the future without jeopardizing federal benefits. But many are unaware of the unique benefits and upcoming changes to the program.

Hey, I'm Zach Lundach, and I'm an hourly financial planner. I recently had the opportunity to hear from Stacy Feifer, the director of the ABLE program here in the state of Nebraska, and I wanted to share some of her key insights. We'll cover what these accounts are, who's eligible, some of their key tax benefits, features unique to Nebraska, and what happens to the account when the owner passes away.

What Are ABLE Accounts and How Do They Work?

ABLE accounts are a financial tool designed for people with disabilities. They allow individuals to save and invest their money without it counting toward asset limits for federal programs like SSI (Supplemental Security Income).

• Federal Asset Limit: A key threshold to be aware of is $100,000. For most federal benefits, if your ABLE account balance exceeds this amount, you run the risk of losing those critical benefits.

• Nebraska Plan's Limit: While the federal limit is a key consideration, Nebraska's plan allows you to put up to $500,000 in the account. This highlights the importance of staying mindful of the federal threshold, even if your state allows a higher balance.

• One Account Per Person: You can only have one ABLE account per person. While the state of Nebraska has its own plan, you cannot have a second one in a different state. It's generally recommended to use your home state's plan to get the state tax benefits, but you should still shop around.

Who Is Eligible? (And a Key New Rule)

To qualify for an ABLE account, the person with a disability must be the account owner, which is a key distinction from 529 plans.

• Disability Before Age 26 (Current Rule): As of the summer of 2025, you must have been disabled before you turned 26 to be eligible for an ABLE account.

• New Rule Change (2026): Starting in 2026, new legislation will increase that age to 46. As long as you were disabled before your 46th birthday, you will be able to open an ABLE account.

• Proving Disability: Eligibility generally requires you to be receiving SSI or SSDI benefits. A substitute for this is a doctor's certificate of severe functional limitation.

Tax Benefits & Features Unique to Nebraska

ABLE accounts offer significant tax advantages, especially for Nebraska residents.

• Tax-Free Growth: Money in the account grows tax-free as long as you use it for qualified expenses.

• Qualified Expenses: The money can be used for a wide range of expenses related to a person's health, independence, and quality of life. (A humorous note from the ABLE program director was that alcohol and gambling do not qualify, despite some short-term quality of life benefits!)

• Annual Contribution Limit: The annual contribution limit for 2025 is $19,000, which is tied to the federal gift tax exclusion.

• Nebraska's Tax Deduction: This is a key distinction from a 529 plan. In Nebraska, you can deduct up to $10,000 for married couples filing jointly or for entities contributing to these accounts. The best part? You don't have to be the account owner to receive this state tax deduction.

• Nebraska's Crowdfunding Feature: The Nebraska plan is the only one in the country that currently allows for crowdfunding. This is a huge benefit because GoFundMe-type donations can often impact eligibility for federal benefits, but crowdfunding within an ABLE account does not.

What Happens to the Account When the Owner Passes Away?

It's important to understand what happens to an ABLE account after the owner passes away.

• The funds can be used to pay for any outstanding final expenses.

• Rollover to Another Individual: An ABLE account can actually be rolled over to another person (a family member or qualified individual). This is a great way to keep the funds growing in a tax-deferred status and support others.

• Small Account Provision: With the Nebraska plan, if the account balance is below $5,000, it can be paid out automatically to heirs, making the transition a little bit easier for smaller account balances.

A Powerful Tool for a More Secure Future

ABLE accounts are a powerful and flexible tool for families navigating life with a disability. By understanding the unique features and tax benefits of the Nebraska plan, along with the upcoming rule change in 2026, you can ensure a more secure and independent future.

At Barrett FP LLC, we offer expert financial planning on an hourly basis, focused entirely on helping you achieve your goals.

Learn more about how we can help you with comprehensive disability and retirement planning and see if we're a good fit.