Qualified Disability Expenses

Withdrawals can be made tax-free to use for a wide range of Qualified Disability Expenses. These are any expenses that are incurred as a result of living with a disability and are intended to improve the Account Owner’s quality of life, health, and provide greater independence.

The U.S. Department of the Treasury has indicated that the following list of qualified disability expenses is not exhaustive and can be construed broadly to include basic living expenses:

  • Education
  • Health and wellness
  • Housing
  • Transportation
  • Legal fees
  • Financial management
  • Employment training and support
  • Assistive technology
  • Personal support services
  • Oversight and monitoring
  • Funeral and burial expenses

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More on Qualified Disability Expenses

The determination as to what is a Qualified Disability Expense is the responsibility of the Account Owner or Authorized Individual. It is recommended that Account Owners or Authorized Individuals retain receipts and statements of withdrawal transactions.

What happens if money is spent on non-qualified expenses?

If funds are withdrawn from an IL ABLE Account for non-qualified expenses, the earnings portion of the withdrawal will be treated as income, so it will be taxed at the Account Owner’s tax rate and will be subject to a 10% federal tax penalty and applicable state taxes. It is important to know that any non-eligible withdrawals are considered income for the month and could count against one’s eligibility for Supplemental Security Income (SSI) benefits or Medicaid. For more information, please read the Plan Disclosure Booklet.