There's a special account for savings and investments that will be open to millions more Americans at the start of the new year. But most people who are eligible don't know about it or how it works.

ABLE accounts, or Achieving a Better Life Experience accounts, allow people with disabilities to save and invest up to $100,000 without jeopardizing key government benefits such as supplemental security income. These accounts grow tax-free and withdrawals for qualifying disability-related expenses are not taxed. Currently, eligibility is limited to those whose disability began before age 26, but this will expand to age 46, potentially increasing eligible participants by 50%.

The accounts are set up by states, with most states and Washington, D.C. offering programs, and some open to out-of-state residents. Annual contribution limits are tied to the federal gift tax exclusion, currently $19,000. Recent changes also allow funds from 529 education savings plans to be rolled over into ABLE accounts, and lower-income families may benefit from the saver's credit when contributing to these accounts.

ABLE accounts expanding: Here's what to know

Now to some personal finance news. There's a special account for savings and investments that will be open to millions more Americans at the start of the new year. But most people who are eligible don't actually know about it or how it works. So guess who does know about it? Sharon Epperson is here. She's gonna join us now with what's going on and what's known as an ABLE account and how this financial resource is expanding. What is going on? Well, Andrew, the word ABLE in this case stands for Achieving a Better Life Experience. And an ABLE account offers a strategy for people with disabilities to save and invest up to $100,000 without impacting key government benefits like supplemental security income. Also, the accounts grow tax-free and there's no federal or state income tax on withdrawals for qualifying expenses as long as funds are used for disability-related costs like housing, transportation, and healthcare. A federal law created the ABLE program, but like 529 Savings Plans, ABLE accounts are set up by states. Four states do not have ABLE account programs, but 46 states and Washington, D.C. do. And some of the plans, like the one in Virginia, are also open to out-of-state residents. There are generally no income limits to contribute to an ABLE account for an eligible beneficiary. And to be eligible, the beneficiary must receive social security disability benefits or supplemental security income or have a physician's statement that says that their disability started before they were 26 years old. About eight million people have ABLE accounts right now with total assets around $2.5 billion. Now, starting January 1st, 2026, eligibility rules will expand. To qualify, the onset of a beneficiary's disability will increase to the age of 46 instead of 26. The number of counts could increase by roughly 50% next year with an estimated 15 million people eligible due to their age. Now, the new federal tax law that President Trump signed in July will also make permanent several advantages that could help further expand ABLE accounts. And for more strategies to increase your own savings, subscribe to my free Money 101 newsletter series using the QR code on the screen right there or go to cnbc.com slash money101. It is also available in Spanish. Okay, so a couple of things. Are there annual contribution limits to ABLE accounts? I have to imagine there are. There are, there are. They're tied to the annual gift tax exclusion and this year it's $19,000. $19,000. And it's expected to increase with inflation over time, over future years. Okay, we also obviously have new tax rules in place, the tax laws. How does that change or impact all of this? One of the biggest changes is with 529 plans, the education savings plans, that if you have one that's already set up and someone in your family has a disability, particularly as this might happen later in life now with this expansion in the age eligibility, you can roll that 529 plan over into an ABLE account. And so that's a major change. And then for lower. That's a big one. That's a very big one. That's a big one because there are people who put money into those 529s and then don't feel like they have a place to put it. Exactly, exactly. And so at this point, the child or the person may not be going to college. This money can be used then in the ABLE account. So that's huge. And then for lower and moderate income families, if they have and they're eligible for a saver's credit, that's something else that will work for an ABLE account as well.

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