The minimum initial contribution to open an Account is $50, and there is a minimum of $25 for subsequent contributions. Any person (including your friends and family), corporation, trust, or other legal entity may make a contribution to your Account. Contributions to an Account are made with after-tax dollars and are not deductible for federal income tax purposes.
Contributions to an Account from all sources cannot exceed $18,000 (unless the expanded contribution for working individuals with disabilities under the Tax Cuts and Jobs Act applies). The maximum lifetime contribution limit is $500,000, though a lower limit of $100,000 generally applies for Supplemental Security Income purposes of determining eligibility to receive government assistance or benefits. See the Program Disclosure Statement for more information.
Contributions can be made using one of the following methods:
- by check (excluding starter checks);
- through an automatic contribution plan (“ACH”);
- by electronic funds transfer (“EFT”);
- by payroll deduction (if your employer provides for payroll deduction and agrees to submit contributions on your behalf); or
- through a Rollover or Program-to-Program Transfer from another qualified ABLE program or a 529 account.
For your protection, if you choose to make contributions and/or withdrawals via ACH, the Texas ABLE Program will use the micro-deposit method of bank account verification. We will make two random deposits to any bank account that you add. These amounts will be deposited to your bank account. You will be required to confirm the exact amounts of the deposits before you are permitted to use the bank accounts for contributions or withdrawals.
Rollovers into the Texas ABLE Program
A Rollover into the Program is a withdrawal of funds from your account in another qualified ABLE program, and the contribution of those funds within sixty days to your Texas ABLE Program Account (if you have not made a similar transfer within the previous twelve months) or to the Texas ABLE Program Account of a person who is an Eligible Individual and a Member of the Family (which generally includes siblings). To initiate a Rollover, you must first open a Texas ABLE Program Account. The Program does not charge a fee for incoming Rollovers.
Unless the Program receives appropriate documentation showing the actual earnings portion of a Rollover contribution, the entire Rollover amount will be treated as earnings for reporting purposes.
Rollovers may only be made during the lifetime of the Designated Beneficiary. In the case of a Rollover, the ABLE account from which amounts were rolled, or taken from, must be closed by the 60th day after the amount was distributed from the ABLE account. A transfer of funds that does not meet the conditions stated above for Rollovers will constitute a Non-Qualified Withdrawal subject to federal tax on any earnings and the Additional 10% Tax. Also, a Non-Qualified Withdrawal may negatively affect a Designated Beneficiary’s eligibility for federal or state benefits. You should carefully read the Rollovers section of the Program Disclosure Statement for more information as well as the tax consequences.
Effective for distributions after December 22, 2017, and before January 1, 2026, amounts in a 529 account may be rolled over to an ABLE account of the 529 account’s designated beneficiary or a “member of the family” (as defined by IRC 529) of the 529 account’s designated beneficiary. Any rollover from a 529 account to an ABLE account is limited by and will count towards the Annual Contribution Limit (currently $18,000). To qualify as a rollover, it must be paid to a Texas ABLE Program Account within 60 days after the date of the withdrawal. Please see the offering document from your 529 account administrator for information regarding the tax consequences of Rollovers out of your 529 account.
Note: The revisions to Section 529 of the IRC permitting rollovers to ABLE accounts was passed by U.S. Congress and was signed into law by the President of the United States on December 22, 2017. The information presented is based on a good faith interpretation of the statutory language. If, and when, material updates become available we will update this website and the Program Disclosure Statement. Please consult with your tax advisor for more information.
Program-to-Program Transfers
A qualified Program-to-Program Transfer occurs when you directly transfer the Designated Beneficiary’s entire ABLE account into a new ABLE account in a different state’s qualified ABLE program for that same Designated Beneficiary, without making any intervening distributions or deemed distributions to the Designated Beneficiary between the time the funds are withdrawn from the original account and deposited into the new account. The transferor’s account is closed upon completion of the transfer. A qualified Program-to-Program Transfer also occurs when you directly transfer part or all of an ABLE account into an ABLE account for another Eligible Individual who is a Member of the Family (generally, a sibling), without any intervening distribution or deemed distribution to the Designated Beneficiary. Program-to-Program Transfers may occur into the Program as contributions or out of the Program as withdrawals.
Program-to-Program Transfers may only be made during the lifetime of the Designated Beneficiary. A transfer of funds that does not meet all of the requirements for Program-to-Program Transfers will constitute a Non-Qualified Withdrawal subject to federal income tax on earnings and the Additional 10% Tax, and may negatively affect the Designated Beneficiary’s eligibility for federal and state benefits. You should carefully read the Program-to-Program Transfer section of the Program Disclosure Statement for more information.
Contribution Limits
Contributions from all sources can be made up to $18,000 per year per Designated Beneficiary, unless the Work Contributions* described below applies. Contributions over $18,000 will not be accepted (unless the Work Contributions described below applies) and will be returned to the contributor, if possible.
No new contributions may be made to any Account if, at the time of a proposed contribution, the Account balance is equal to or greater than $500,000. Accounts that have reached the Lifetime Account Limit may continue to accrue earnings.
The Program Manager will not knowingly accept attempted contributions that would cause your Account to exceed the annual or lifetime contribution limits (an “Excess Contribution”). If an attempted Excess Contribution is received by the Program, it will be placed in a non-interest-bearing account and refunded automatically to the contributor whenever possible. However, if attempts to obtain any information necessary to refund the attempted Excess Contribution to a contributor other than the Designated Beneficiary are unsuccessful, the refund will be made to the Designated Beneficiary. See the Contributing to Your Account section of the Program Disclosure Statement for more information.
*Work Contributions for Certain Designated Beneficiaries
For contributions made on or after January 1, 2018, and before January 1, 2026, certain Designated Beneficiaries may make excess contributions to an Account above the $18,000 limit (Work Contributions). Such Designated Beneficiaries may annually contribute up to the lesser of (1) the Designated Beneficiary’s compensation includable in the Designated Beneficiary’s gross income for the taxable year, or (2) the poverty line for a one-person household as determined for the preceding taxable year ($13,590 for 2022 and $14,580 for 2023). Although contributions from all sources can be made to an Account up to $18,000 per year per Designated Beneficiary, note that only certain Designated Beneficiaries are permitted to make Work Contributions.
In order to qualify for Work Contributions, the Designated Beneficiary must be an employee (within the meaning of Section 401(c) of the Internal Revenue Code, which includes a definition of self-employed individual) for whom no contributions have been made for the taxable year to: (i) a defined contribution plan that meets the requirements of Sections 401(a) or 403(a) of the Internal Revenue Code, (ii) an annuity contract described in Section 403(b) of the Internal Revenue Code, or (iii) an eligible deferred compensation plan described in Section 457(b) of the Internal Revenue Code. The IRS has clarified that a Designated Beneficiary (or a person acting on behalf of the Designated Beneficiary) is solely responsible for ensuring eligibility for Work Contributions and for maintaining adequate records for this purpose. See the “Expanded Annual Contribution Limit for Certain Designated Beneficiaries” section of the Program Disclosure Statement for more information (note that the Program Disclosure Statement uses the term Expanded Annual Contribution Limit in reference to Work Contributions).
Supplemental Security Income (“SSI”) Limits
The Social Security Administration (“SSA”) has issued guidance on how SSA will treat ABLE accounts for purposes of determining a Designated Beneficiary’s benefit eligibility under SSI. SSA will exclude the following from countable resources:
- Up to and including $100,000 of the balance of funds, including any earnings, in an ABLE account from the resources of the Designated Beneficiary.
- Withdrawals for Qualified Disability Expenses other than housing if the withdrawal is retained beyond the month received.
This exclusion applies while:
- the Designated Beneficiary maintains, makes contributions to, or receives withdrawals from the ABLE account;
- the withdrawal is unspent;
- the withdrawal is identifiable; and
- the individual still intends to use the withdrawal for non-housing related Qualified Disability Expenses.
This guidance is derived from publicly available sources and is not intended to be exhaustive, and is subject to change by the SSA at any time. For more information on how SSA treats ABLE accounts please see “SI 01130.740 Achieving a Better Life Experience (ABLE) Accounts” in the Program Operations Manual System.
Note, however, that SSA will not deduct contributions from the countable income of the person who makes the contribution. The fact that a person uses his or her income to contribute to an ABLE account does not mean that income is not countable for SSI purposes. For example, a Designated Beneficiary can have contributions automatically deducted from his or her paycheck and deposited into his or her own ABLE account. In this case, the income used to make the ABLE account contribution would still be included in the Designated Beneficiary’s gross wages.
The Program is required to report monthly to SSA on all Account balances and activity. SSA will count the amount by which an Account balance, including any earnings, exceeds $100,000 as a countable resource of the Designated Beneficiary. A special rule applies when the balance of an SSI recipient’s ABLE account exceeds $100,000 by an amount that causes the recipient to exceed the SSI resource limit–whether alone or in combination with other resources. When this happens, the recipient is put into a special SSI suspension period where:
- SSA suspends the recipient’s SSI benefits without time limit (as long as he or she remains otherwise eligible);
- the recipient retains continued eligibility for medical assistance (Medicaid); and
- the individual’s eligibility does not terminate after 12 continuous months of suspension.
Note: Withdrawals for housing-related expenses must be spent in the month received or they will count as a resource of the Designated Beneficiary beginning on the first day of the month following receipt of the withdrawal.
Prior to opening an ABLE account, individuals should consult with their own advisors for additional information on the possible impact of having an ABLE account on the Designated Beneficiary’s eligibility for federal and state benefits.
Gifting
We have designed a special gifting tool that makes it easy for family and friends to make gifts into your account. From your online account, you can create an eGift event. You will add the email addresses of your friends and family members. We will send out an email to them with a unique link and a personalized message, instructing them on how to make a gift to your account.
Account Minimum
If an Account has a zero balance for 90 days or more it may be closed by the Program. To reinstate an Account closed by the Program for zero balance, the Designated Beneficiary must complete a reinstatement online. The $3.50 per month account maintenance fee continues to accrue until the Account is closed by the Program.
