ABLE Account vs. Special Needs Trust: Which Does Your Child Need?

Our son Neil is in sixth grade. He has a 529 college savings account. When he gets older and applies for SSI — Supplemental Security Income, the federal benefit program for people with disabilities — that 529 counts as an asset.

His account isn’t rich, but under SSI rules, you can't have more than $2,000 in your own name, or your benefits are suspended. (The cap, which forces the disabled to remain poor, was set in 1989 and has never been updated.)

The 529 is in our name, not Neil's, but SSI counts it anyway.

So we assumed the move was simple: when Neil gets older, we roll over his 529 into an ABLE account—if it’s not drained by lawyer’s fees. ABLE accounts don't count as assets under SSI. Problem solved.

We were right. But only up to $100,000.

Above that, SSI counts the excess toward the $2,000 limit and benefits are suspended. For anything above $100,000, there's a different tool — a supplemental needs trust. And the two of them work together in ways that took us a webinar and a lawyer to understand.

Here's what we learned.

Acronyms terrify me. ABLE stands for Achieving a Better Life Experience. The federal ABLE Act became law in 2014. New York's program launched in 2017. As of May 1, 2026, there were approximately 5,200 open New York ABLE accounts, with over $71 million invested—enough to buy a WNBA franchise—and more than $40 million withdrawn for qualified investments (paying for a sports franchise is not among them).

An ABLE account is a tax-advantaged savings account for people with disabilities. Money in an ABLE account doesn't count as an asset under federal benefit programs — SSI, SSDI, Medicaid, HUD, SNAP. You can save, invest, and spend without losing the benefits you depend on.

The problem ABLE was designed to solve is blunt. SSI's $2,000 asset cap was set in 1989. The Berlin Wall was still standing. It has never been increased. "Most commonly, what we hear," says Jenna McClosky, outreach coordinator for the NY ABLE Program, "is that people are just spending their money down on things they don't want and things they don't need just because they need to maintain their benefits."

An ABLE account ends that. Instead of spending down, you save.

You must be a U.S. citizen or resident alien with a disability that was present before age 46 — originally, the law set the age at 26, but was changed in 2022 when Congress widened the eligibility. As a result, 6 million more Americans are eligible, including over a million veterans.

But you don't need to be under 46 to open an account. You don't even need a diagnosis by 46. "If you happen to be someone diagnosed at maybe 50," McClosky says, "but you had symptoms for years, then maybe you'd still be able to comfortably say that disability was still in place prior to the age of 46."

One account per disabled individual, nationwide.

Yes. New York ABLE became a national program a few years ago. You no longer need to be a New York State resident to open an account. And if you open one and later move out of state, the account comes with you.

Nearly anything. The IRS defines a qualified disability expense as any expense incurred as a result of living with a disability that is intended to improve the health, independence, or quality of life of the disabled individual. The list of examples includes education, housing, transportation, health and wellness, legal fees, assistive technology, and funeral expenses.

In practice, McClosky says, her team has never been able to come up with something that wouldn't qualify. "While I can't say that anything qualifies, it winds up being pretty close to anything."

Rent: yes. A car: yes, as long as it's for the benefit of the account holder. A down payment on a home: yes.

One note for SSI recipients: when you withdraw money for housing costs, spend it within the same calendar month. SSI won't count it against you if it's gone before the month ends.

The annual contribution limit is $20,000 — total, from all sources combined. Friends, family, grandparents, anyone can contribute. New York's account balance maximum is $520,000, one of the highest in the country.

If you work and don't contribute to a retirement account, you may be eligible to contribute an additional amount — roughly $15,390 in 2026, or your annual income, whichever is less. That brings the potential annual maximum to about $35,000.

SSI beneficiaries can have up to $100,000 in an ABLE account without any impact on their benefits. Above $100,000, SSI counts the excess toward the $2,000 resource limit and benefits are suspended.

This is the number every family needs to know. ABLE is the right tool up to $100,000. Above that, a supplemental needs trust picks up where ABLE leaves off — no cap, no SSI impact.

An ABLE account is flexible. It comes with a debit card. The account holder controls it directly. It's free to open and costs almost nothing to maintain. It's the right tool for day-to-day spending and short-term saving — and for SSI recipients, it protects assets up to $100,000.

A supplemental needs trust — New York's term for what most people call a special needs trust — has no cap. No asset limit. No SSI impact, regardless of how much is in it. The money is managed by a trustee and spent on the beneficiary, but it is never legally the beneficiary's money. "It's a legal loophole," says Malki Scher, an estate planning attorney at Moskowitz Legal Group, "where money could be put into a trust, used completely for John's benefit, but it's not considered John's money."

Yes — and for many families, that's the right answer.

An ABLE account is easy to open, free to maintain, and comes with a debit card. It's designed for day-to-day spending and short-term saving. A supplemental needs trust is set up with an attorney, managed by a trustee, and built for long-term wealth preservation. It has no asset cap and no Medicaid clawback.

"Special needs trusts are still wonderful," McClosky says, "and can still be had alongside an ABLE account. You can have both."

The practical division: ABLE handles the flexible, accessible money — up to $100,000 for SSI recipients. The trust holds anything above that, along with inheritances, life insurance proceeds, and settlement money that needs to stay out of your child's name permanently.

During your child's lifetime: no. Medicaid cannot count money in an ABLE account as an asset.

At death: yes. ABLE accounts are subject to Medicaid recapture. After the account holder dies, Medicaid can claim back what it spent on their care during the time the account was open. Families have six months to submit any outstanding qualified expenses — funeral costs, housing, health and wellness — which are paid out first. Medicaid only recovers what's left after that.

This is the structural difference from a supplemental needs trust. Because “trust” money is never legally the beneficiary's, Medicaid cannot claim it at death. For families with significant assets, the two tools work together: ABLE for flexibility and daily spending, trust for everything above $100,000 and anything you don't want Medicaid to recover at death.

Yes — and the answer matters for autism and disability families with existing 529 college savings accounts specifically.

I was digging through a Facebook group and saw a post that suggested there might be tax implications when rolling a 529 into a Pennsylvania ABLE account. That guidance was wrong, or at minimum misleading.

"That is a federal rule," McClosky confirmed. "Any state 529 college savings account into any state ABLE account — it would be free of any taxes or penalties."

State lines don't matter. You can roll a New York 529 into a Massachusetts ABLE account with zero tax implications. You can roll any state's 529 into any state's ABLE account. The rollover counts toward the $20,000 annual contribution limit, but there are no taxes, no penalties, and no need to call an accountant first.

One related note: if you're trying to access 529 funds for a disabled child without penalties — sometimes called the 529 disability exception — rolling to an ABLE account is the cleanest path. It's a qualified rollover under federal law.

No — and this is where the Facebook thread got it half right. New York does not offer a state income tax deduction for ABLE contributions. (The NYS 529 program offers up to $10,000 for married filers, $5,000 for single — ABLE does not.)

But there is a federal tax credit most parents don't know about: the Saver's Credit. It may be available for ABLE contributions depending on income. Check eligibility at mynyable.org.

Growth in an ABLE account is tax-free. Withdrawals for qualified expenses are tax-free and not counted as income. The only tax risk is if the IRS audits a withdrawal and determines it wasn't a qualified expense — and even then, the penalty applies only to the growth portion.

The savings option earns interest at a variable rate — check mynyable.org for current rates. The checking option, held through Fifth Third Bank, does not earn interest but comes with a debit card for daily spending. The four investment options — ranging from conservative to aggressive — grow tax-free over time, with the aggressive option (85% stocks, 15% bonds) designed for long-term savers who won't need the money regularly.

Growth across all options is tax-free as long as withdrawals are used for qualified expenses.

Not at a branch. You can't open a New York ABLE account at Fidelity, Chase, or your local credit union. New York's ABLE program is administered by the State Comptroller's office. You open an account at mynyable.org — not at a teller window.

The checking option inside the account is held through Fifth Third Bank, which is where the debit card comes from. But the account itself lives at NY ABLE, not at a bank.

Fees are low: an asset-based fee of 0.28–0.35% annually, a $10 quarterly maintenance fee (electronic statements), and a $2 monthly fee for the checking option — waived if your average daily balance is over $250 or you're enrolled in electronic statements.

A well-meaning relative wants to give your child money. They hand over a check. The money lands in your child's name. SSI finds out. Benefits are suspended.

This happens. Regularly.

ABLE accounts have a solution called UGift. Every account gets a unique code. Share the code, not your account number or Social Security number. Relatives go to ugift529.com, enter the code, and contribute directly. Birthday gifts, holiday gifts, regular contributions — all of it goes into the ABLE account without any impact on benefits and without sharing any personal information.

If the amounts are larger — an inheritance, a life insurance payout, a settlement — the supplemental needs trust is the right vehicle. "If they ask you," Scher says, "you could say, we actually set up a special needs trust. This is how to access it." The money goes straight in. Benefits stay intact.

Two solutions to the same problem. The size of the gift determines which one you use.

Go to mynyable.org and click enroll. You'll need the name, date of birth, address, Social Security number, and phone number of the disabled individual, plus information for whoever is managing the account if that's someone other than the account holder. Minimum to open: $25, or $15 with payroll deduction.

Questions: 1-855-5-NY-ABLE, 8am–8pm. Email: [email protected].

Jenna McClosky is the outreach coordinator for the NY ABLE Program, administered by the New York State Comptroller's Office. She presented at a Tri County Care webinar on May 27, 2026. Malki Scher is an estate planning attorney at Moskowitz Legal Group. She presented at a Tri County Care webinar in March 2026.