Are You Maximizing the New Opportunities in ABLE and 529 Accounts?

H.R.1 delivers permanent, inflation-adjusted tax benefits for families.

Recent legislation (H.R.1, formerly the “One Big Beautiful Bill Act”) has introduced powerful, permanent changes to ABLE and 529 accounts offering high-net-worth families greater control, flexibility, and efficiency in how they plan for both education and disability-related expenses.

These changes are not just technical upgrades. They represent a new generation of planning opportunities that can significantly enhance multigenerational wealth strategies and tax efficiency.

ABLE accounts: A strategic asset for managing disability of a loved one

For families or individuals supporting a loved one with a disability, the ABLE account has evolved from a niche benefit to a versatile tool that now merits a central role in long-term planning.

Key enhancements:

• Increased contribution capacity: Working individuals with disabilities may now permanently contribute beyond the $17,000 standard annual limit up to an additional $15,650 (based on 2025 poverty thresholds). This allows some to contribute over $30,000 annually shielding more earned income in a tax-advantaged vehicle.
• Permanent saver’s credit access: Contributions to ABLE accounts may now permanently qualify for the Retirement Saver’s Credit offering a potential tax credit of up to $1,050 annually starting in 2027.
• 529-to-ABLE rollovers: Families can now transfer unused 529 funds to an ABLE account tax-free and penalty-free within the annual contribution limits. This eliminates the tax uncertainty of repurposing unused education savings when a beneficiary develops a disability.
• Expanded eligibility: Beginning in 2026, individuals who became disabled before age 46 will be eligible for ABLE accounts nearly doubling the pool of eligible Americans, including many veterans and late-onset conditions.

Planning insights:

• Preserve and optimize: Use ABLE accounts in tandem with 529s and other planning tools to protect assets, preserve benefit eligibility, and create flexibility for unforeseen needs.
• Tax efficiency: ABLE contributions can be layered into broader tax strategies especially when aligned with earned income thresholds and credit eligibility.
• Wealth transfer: Consider ABLE accounts as part of a long-term, tax-advantaged gifting strategy, especially for children or other beneficiaries with disabilities.

529 plans: Greater breadth for educational planning

The 529 plan has long been a go-to strategy for education funding. H.R.1 significantly enhances its flexibility, making it a more robust tool for both traditional and non-traditional education planning.

What’s new:

• K–12 withdrawal cap doubled: Starting in 2026, families may withdraw up to $20,000 per student annually for K–12 expenses. This includes private school tuition, books, tutoring, and even online learning resources.
• Expanded qualified expenses: 529 plans now cover educational therapies, dual-enrollment programs, test fees, and homeschooling materials ideal for families investing in personalized or alternative educational tracks.
• Professional credentialing: 529 funds can now be used to pay for certifications and occupational licensing programs supporting adult learners, career changes, or advanced professional development.
• Employer education benefit integration: Employer tuition assistance now permanently inflation-adjusted can be strategically combined with 529 withdrawals to maximize value.

Planning insights:

• Front-load for flexibility: Leverage accelerated contributions or five-year front-loading to fund 529s early, allowing more growth and adaptability across a child’s full educational journey.
• Maximize state deductions: Use state tax incentives to your advantage when making contributions, especially before large K–12 withdrawals.
• Align with career transitions: Repurpose unused 529 funds for mid-career professional development or retraining particularly helpful for family members navigating new ventures or licensing requirements.

Bringing it all together

The updates to ABLE and 529 plans reflect a policy shift toward permanence, portability, and personalization. For high-net-worth families, these accounts now offer expanded utility far beyond their original purpose.

By integrating these tools into a broader wealth strategy, families can:

• Enhance intergenerational planning,
• Maximize tax efficiency,
• Protect against unexpected life events, and
• Support a wide spectrum of educational and disability-related needs.

Your Keiter Opportunity Advisor can walk you through how these tools may align with your existing estate plans, education strategies, or philanthropic goals.