Planning for a child or family member with special needs brings unique financial challenges for military families. Between deployments, PCS moves, and the transition to civilian life, keeping benefits intact while building financial security requires careful coordination.
ABLE accounts offer a tax-free way to save for disability-related expenses without losing access to programs like Supplemental Security Income or Medicaid. For families at Fort Bragg and military families nationwide, a major change took effect in January 2026 that expanded who qualifies for these accounts.
What is an ABLE Account?
An ABLE account (Achieving a Better Life Experience) is a tax-advantaged savings account designed for people with disabilities. Congress created these accounts in 2014 to help individuals with disabilities and their families save money without jeopardizing means-tested government benefits. The account works similarly to a 529 college savings plan. Money grows tax-free, and withdrawals used for qualified disability expenses are also tax-free. These expenses include housing, education, healthcare, transportation, employment training, assistive technology, and other costs that help maintain health, independence, and quality of life.
For military families who rely on programs like Medicaid, SSI, SNAP, or HUD assistance, ABLE accounts offer something standard savings accounts cannot. Traditional savings accounts count against the $2,000 resource limit that many government benefits impose. ABLE accounts do not, up to certain limits.
2026 Changes: More Veterans Now Qualify
Previously, only individuals whose disability began before age 26 could open an ABLE account. That requirement excluded many veterans whose disabilities occurred during later enlistments, deployments, or training. Starting January 1, 2026, the age requirement increased from 26 to 46. This means anyone whose disability began before age 46 can now open an ABLE account, regardless of their current age.
This change opens ABLE accounts to millions more people, including veterans who became disabled during service after age 26. To qualify, your disability must have begun before age 46, and you must either receive Social Security disability benefits or have a signed disability certification from a physician.
Veterans who receive VA disability compensation and meet the age requirement may qualify. Military families with special needs children or dependents whose disability began before age 46 also qualify.
Contribution Limits and ABLE to Work
The annual contribution limit for ABLE accounts in 2026 is $20,000. This applies to all contributions made during the calendar year, whether from the account owner, family members, friends, or other sources like special needs trusts or 529 plan rollovers.
Working account owners have an additional option. If you're employed and do not participate in an employer-sponsored retirement plan like a 401(k) or TSP, you can contribute extra earned income to your ABLE account. For 2026, this additional amount is up to $15,650 for those living in the continental United States, or your actual compensation, whichever is less. This ABLE to Work provision means a working account owner in North Carolina could potentially contribute up to $35,650 in 2026 if they meet the requirements. Account balance limits vary by state program, but typically range from $235,000 to just under $600,000. However, balances over $100,000 will suspend SSI cash benefits, though Medicaid and other benefits continue unaffected.
What Can ABLE Account Funds Pay For?
Qualified disability expenses cover a wide range: any expense that helps maintain or improve health, independence, or quality of life.
Housing expenses qualify, including rent, mortgage payments, property taxes, and utilities. This can be particularly helpful for veterans transitioning to civilian life who need accessible housing or modifications.
Transportation costs qualify, whether that's a vehicle purchase, modifications for accessibility, gas, insurance, or public transportation. Healthcare expenses not covered by insurance or VA benefits can be paid from an ABLE account, including copays, dental care, vision care, therapy, and medical equipment.
Employment-related expenses qualify, too. Costs like job coaching, transportation to work, and workplace accommodations can be paid from the account. Education expenses, assistive technology, personal support services, financial management, and legal fees also qualify.
ABLE Accounts and Special Needs Trusts
Military families planning for special needs dependents often ask whether they should use an ABLE account or a special needs trust. These tools serve different purposes, and many families benefit from using both.
ABLE accounts are simpler to open and manage. The account owner controls the account directly and can access funds easily through a debit card. There are no attorney fees to establish the account.
Special needs trusts require legal documents and a trustee to manage distributions. They're more complex and more expensive to create. However, special needs trusts have no contribution limits and offer more flexibility for large inheritances or life insurance proceeds.
ABLE accounts work well for everyday expenses. Special needs trusts work better for large amounts of money or long-term planning. Many families use the ABLE account for day-to-day qualified disability expenses, while the special needs trust holds larger assets and covers expenses like vacations or entertainment.
If you're planning to name a special needs dependent as the beneficiary of your Survivor Benefit Plan, life insurance, or other military survivor benefits, a special needs trust is typically the better choice for those larger sums. The ABLE account can then supplement those funds for everyday expenses.
Tax Benefits
ABLE accounts offer tax advantages at both the federal and state levels. Contributions are made with after-tax dollars, but the money grows tax-free inside the account, and withdrawals used for qualified disability expenses are also tax-free.
North Carolina residents can deduct up to $5,000 per year in contributions to the NC ABLE program when filing state taxes. For married couples filing jointly, the deduction is $10,000. This state tax benefit applies only to contributions made to your own state's ABLE program.
Account owners who work and contribute their own earned income may be eligible for the federal Saver's Credit. This non-refundable tax credit can be worth up to 50% of the first $2,100 contributed, for a maximum credit of $1,050.
Rolling Over 529 Plans
Military families who opened 529 college savings plans for a child later diagnosed with a disability can roll over money from a 529 plan to an ABLE account without tax penalty. The rollover must be completed within 60 days. The ABLE account beneficiary must be either the same person as the 529 beneficiary or a family member. The rolled-over amount, plus any other contributions made during the same year, cannot exceed the annual contribution limit of $20,000. This provision became permanent in 2026. If you saved for college but your child's disability makes traditional college attendance unlikely or impossible, you can redirect those education savings toward qualified disability expenses.
Military-Specific Considerations
For military families at Fort Bragg or anywhere else, a few specific considerations apply.
If you're receiving VA benefits or military survivor benefits for a special needs dependent, those benefits can be used to fund an ABLE account. However, contributing those funds to an ABLE account does not exclude them from counting as income for benefit eligibility purposes.
If you're an active-duty service member with a special needs dependent and you're considering estate planning, your Servicemembers' Group Life Insurance proceeds and Survivor Benefit Plan payments should be carefully coordinated with your ABLE account and special needs trust planning. Large life insurance payouts should typically go to a special needs trust rather than directly to an ABLE account because of the contribution limits.
For veterans who became disabled during service and meet the age 46 requirement, an ABLE account can supplement VA disability compensation. You can save VA benefits in the account, invest the funds, and use them tax-free for qualified expenses.
Making the Decision
ABLE accounts are a useful tool for military families with special needs dependents or veterans with disabilities. The 2026 expansion to age 46 brings this option to many more people who were previously excluded. The accounts won't replace comprehensive special needs planning, but they work alongside special needs trusts, VA benefits, and other resources to give individuals with disabilities more financial independence and flexibility.
Before opening an ABLE account, think about how it fits with your overall plan. How will the account coordinate with existing benefits? Will you also need a special needs trust for larger assets? Which state's ABLE program offers the best combination of investment options, fees, and tax benefits for your situation?
For military families in the Fayetteville, Southern Pines, or Fort Bragg area navigating special needs planning, Good Life Financial Advisors works with families throughout North Carolina and South Carolina. We understand how ABLE accounts, special needs trusts, VA benefits, and military survivor benefits coordinate to protect your family member's financial future.
Contact us for a consultation to discuss your special needs planning strategy and how ABLE accounts might fit into your overall plan.
Frequently Asked Questions About ABLE Accounts
Can I have both an ABLE account and a special needs trust for the same person?
Yes. Many families use both tools together. The ABLE account typically handles everyday expenses like rent, groceries, transportation, and medical copays because the account owner can access funds directly through a debit card. The special needs trust holds larger assets and covers expenses that don't qualify as disability-related, like vacations or entertainment. Funds from a special needs trust can also be transferred to an ABLE account as needed, as long as you stay within the annual contribution limit.
If my child is receiving SSI and I put money in their ABLE account, will it affect their monthly SSI payment?
Up to $100,000 in an ABLE account does not affect SSI eligibility or payment amounts. Once the account balance exceeds $100,000, SSI cash payments will be suspended until the balance drops back below $100,000. However, Medicaid eligibility continues regardless of the ABLE account balance. The account owner remains eligible for other benefits, such as SNAP and housing assistance, regardless of how much is saved in the ABLE account.
My son is a veteran who was injured during deployment at age 32. Does he qualify for an ABLE account now?
Yes, as long as his disability began before age 46. The 2026 expansion specifically helps veterans whose disabilities occurred after age 26. If he receives VA disability compensation or Social Security disability benefits, that serves as proof of eligibility. If he doesn't receive those benefits, he'll need a signed disability certification from his doctor confirming the disability began before age 46 and meets Social Security Administration criteria. He can open an ABLE account at any age as long as the disability onset was before 46.