ABLE Accounts

Frequently Asked Questions

If you have a disability that meets Social Security’s standards (there are separate disability standards for children or youth, for adults, and for blindness) and your disability began before you turned 26, you can save money in a tax-free Achieving a Better Life Experience (ABLE) account without affecting your Supplemental Security Income (SSI), Health First Colorado (Medicaid), and most other benefits (as long as you meet all other benefit criteria).

The growth of the investments in an ABLE account is tax-free, and you can spend the money on disability-related expenses, like housing, transportation, or education. Plus, if you have a job and save some of your earnings in your ABLE account, when you file your taxes you may qualify for the Saver's Credit. However, there are limits on how much can be deposited into your ABLE account in a single calendar year. Also, if the total amount in your ABLE account goes over $100,000, your SSI benefits stop until the balance falls below $100,000.

Learn more about ABLE accounts.

You can open an ABLE account if you have a disability that meets Social Security’s standards (there are separate disability standards for children or youth, for adults, and for blindness) and your disability began before you turned 26. If you get benefits from Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), disability-based Health First Colorado (Medicaid), or other programs that use the SSA standards, you definitely qualify for an ABLE account. If you don’t get these benefits based on your disability, you can still qualify for an ABLE account by having a doctor verify that your disability meets the SSA standard, and causes “marked and functional limitations.”

Learn more about whether your disability qualifies.

There are two basic reasons for opening an ABLE account:

  1. To save money without worrying about the resource limits for Supplemental Security Income (SSI), Health First Colorado (Medicaid), Supplemental Nutrition Assistance Program (SNAP), and other benefits programs; and
  2. To take advantage of tax benefits.

ABLE accounts let people with disabilities build up a savings safety net and plan for the future without having to worry that their savings might cause them to lose their benefits. Learn more about why you should open an ABLE account.

An ABLE account is fairly easy and inexpensive to set up. You can set up the account yourself or your parent, legal guardian, or an agent with a valid power of attorney can set up the account for you. Each state is allowed to set up an ABLE account program, but not all states have chosen to create one. Colorado's ABLE account program is Colorado ABLE.

You can open an ABLE account in any state you choose — you do not have to open an account in the state where you live. States with ABLE programs list their program details and explain their application process online. The ABLE National Resource Center lists details about each state’s ABLE program, with links to each state website.

Learn more about opening an ABLE account.

To choose the best ABLE account for you, use the ABLE National Resource Center to learn which states offer ABLE programs, how each program works, and if you need to be a resident of that state to open an account there. You can only open one ABLE account, so you need to compare the different programs. Colorado's ABLE account program is Colorado ABLE.

When comparing programs, check:

  • The minimum amount you need to open an ABLE account, and the cost of any fees
  • How you can deposit and withdraw money from the account — electronic transfer, paper check, debit card, etc. — and how long it takes to get your money when you need it
  • The investment choices you have (each state offers multiple options, but some offer more than others)
  • The level at which the program stops letting you make more deposits (usually somewhere between $200,000 and $500,000)

Learn more about opening an ABLE account.

You can only have one ABLE account, but you can transfer your account from one state to another if the first state program you choose doesn’t meet your needs (there may be minor fees to make the transfer). Learn more about opening an ABLE account.

The most you, your family, or your friends — combined — can deposit in your ABLE account each year is $16,000. If you have a job, you can deposit another $12,880 of your own earned income into your account. This means that if you work, you could save as much as $28,880 in your ABLE account in 2022.

If you get Supplemental Security Income (SSI) benefits and the total amount in your ABLE account goes over $100,000, your SSI benefits stop until the balance drops below $100,000.

And each state sets the maximum amount that can be in its ABLE accounts; that maximum can be $200,000 – $500,000 or more. If you have that much in your ABLE account, you can't deposit any more until your account balance drops back down. For the Colorado ABLE program, the limit is $400,000. Learn more about how much money you can save in your ABLE account.

Anyone — you, your family, your friends — can put money into your ABLE account, but there are two limits on how much can be deposited in a calendar year, depending on where the money comes from:

  • Up to $16,000 from any source (including your family and friends, your benefits, and other unearned income)
  • Up to another $12,880 from your own earned income (if you have a job)

Learn more about depositing money into your ABLE account.

Rules vary by state, but you can typically use a paper check, electronic fund transfer, payroll deduction, or an automatic investment plan to deposit money in your ABLE account. After you deposit the money, you might have to wait 5 – 10 business days before you can use it, depending on the rules on your account. Learn more about the rules for putting money in an ABLE account.

The rules for taking money out of an ABLE account vary by state. Some accounts ask for a signed withdrawal request explaining how you’ll use the money on a qualified disability expense, and it can take 5 – 10 business days to get the money. Some accounts include a prepaid debit card. You can load money from your ABLE account onto the card and then use the card to pay for qualified expenses. You need to spend the amount loaded on the card on qualified expenses by the end of the calendar year, or you may have to pay income tax and a 10% penalty on the leftover amount, and it can affect Supplemental Security Income (SSI) or other benefits. The Colorado ABLE program lets you use a debit card connected to your active checking account, or for an additional fee you can get checks for your Colorado ABLE account.

You can spend money you take out of your ABLE account on any “qualified disability expense,” which means anything that helps you increase or maintain your health, independence, or quality of life. This includes housing, transportation, medical expenses, prevention, wellness, education, employment training and support, assistive technology, personal assistance services, financial management, administrative services, legal fees, and basic living expenses. You need to keep all receipts to prove you spent the money on qualified expenses. Learn more about spending the money in your ABLE account.

ABLE accounts can have two tax benefits:

  1. The growth of your investments isn’t taxed, and
  2. If you work and save earned income in your ABLE account, you may qualify for the federal Saver’s Credit.

However, to get these tax benefits any money taken out of your ABLE account must be spent on qualified disability-related expenses. If you take money out of your ABLE account and don’t spend it on disability-related expenses, you may have to pay income tax plus a 10% penalty.

Learn more about why you might want an ABLE account.

Learn more