Common Pitfalls

You must spend any money you take out of your ABLE account on qualified disability expenses. If you spend it on expenses that don’t qualify, or if you just put the money in a different account, you may have to pay income tax on that amount, plus a 10% penalty, and this might affect Supplemental Security Income (SSI), Health First Colorado (Medicaid), or other benefits. Learn more about spending money in your ABLE account.

There are two limits on how much can be put into your ABLE account each year, based on where the money comes from:

• Up to $18,000 from any source, including your family and friends, your benefits, and other unearned income, and
• Another $14,580 from your own earned income (if you have a job).
  • Note: If you or your employer make contributions to a retirement plan set up by your employer, you might not qualify for the extra ABLE contribution amount based on having a job (you can still make regular ABLE contributions). If you aren't sure about this, ask your ABLE account program or check with a tax expert. Get more information about this rule from the ABLE National Resource Center.

Colorado ABLE will automatically stop accepting deposits for the rest of the year once $18,000 has been deposited in the account (unless you submit paperwork to deposit more than that amount), but not every state does this automatically, so you may need to keep a record of how much has been put into your ABLE account.

Learn more about depositing money into your ABLE account.

It’s important to keep good records. Even if other people make deposits, you are the one who has to make sure that too much money isn’t put into your ABLE account.

Colorado ABLE will automatically stop accepting deposits for the rest of the year once $18,000 has been deposited in the account (unless you submit paperwork to deposit more than that amount), but not every state does this automatically. Check with your ABLE program if you have questions about this.

Important: Taking money out of your account doesn’t mean you can put more in. The deposit limits are on how much total money is put into the account each year. Taking some out doesn’t change that.

Learn more about depositing money into your ABLE account.

If the amount in your ABLE account goes over $100,000, your Supplemental Security Income (SSI) benefits stop. The suspension has no time limit, and your SSI benefits can start again if the balance drops below $100,000.

Even if SSI benefits stop because you have too much money in your ABLE account, you can still get Health First Colorado (Medicaid) coverage as long as you meet all other eligibility rules.