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The Basics
A tax-free Achieving a Better Life Experience (ABLE) account lets people with disabilities save for their future without affecting their benefits. It also lets family and friends give them money.
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 may be able to save up to $30,590 each year in an ABLE account without affecting Health First Colorado (Medicaid), Supplemental Security Income (SSI), and most other benefits, as long as you meet all the other benefits rules.
Of that $30,590 per year, up to $17,000 can come from any source, including your family, friends, benefits, or other unearned income. If you have a job, you can save up to another $13,590, which can only come from your own earned income.
An ABLE account lets you:
- Build up savings without affecting your benefits: Up to $100,000 in your ABLE account won’t affect your SSI benefits. And no matter how much you have in your ABLE account, the money in it won’t affect Health First Colorado (Medicaid), the Supplemental Nutrition Assistance Program (SNAP), and most other programs with a resource limit.
- Get money from family and friends without affecting your benefits: Whether you earn the money yourself or it’s a gift from others, up to $17,000 each year can be added to your ABLE account without any changes in your SSI or other benefits.
- Have a job, and put up to an extra $13,590 of your earnings each year into your ABLE account (on top of the regular $17,000 that is allowed). Learn more about how much you can deposit into your ABLE account.
- Spend the money saved in your ABLE account on many types of daily expenses, not just medical costs: There are rules about how to spend the money, but there’s also a lot of flexibility.
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Enjoy tax advantages:
- The growth of investments in an ABLE account isn't taxed, so your wealth grows faster.
- If you have your ABLE account with Colorado ABLE, you may get a state tax deduction for any contributions you make.
- You may qualify for the federal Saver’s Credit. However, when you take money out of the account, you must spend it on qualified disability-related expenses, or it will be taxed as income and there may be a penalty. Learn more about the federal tax benefits of an ABLE account.
ABLE programs are set up by each state. Colorado's ABLE account program is Colorado ABLE.
If you qualify, you can open an ABLE account in any state that has an ABLE program open to customers nationwide (you do not have to live in the state where you open an ABLE account). However, you can only open one ABLE account, so you need to decide which state offers the ABLE program that works best for you. The good news is that you can switch your ABLE account from one state program to another. You do not have to stick with the first state program you choose. Learn more about why you may want to open an ABLE account.
An ABLE account can be set up in addition to a Special Needs Trust, but an ABLE account costs less to set up and gives you more choice and control. For example, money in a Special Needs Trust cannot be used for housing or basic living expenses like food and clothing, but you can use money in an ABLE account to pay for these. Individuals with disabilities and their families may choose to have both an ABLE account and a trust. Learn more about Special Needs Trusts.
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Why an ABLE Account?
There are two basic reasons for opening an ABLE account:
- To save money without worrying about the resource limits for Supplemental Security Income (SSI) and other benefits; and
- To take advantage of tax benefits.
We'll look at how ABLE accounts affect the resource limits for SSI and other programs, the tax benefits of an ABLE account, and how an ABLE account and a Special Needs Trust can both be part of your financial plan.
Resource Limits
To get benefits from SSI, the Supplemental Nutrition Assistance Program (SNAP), and some other programs, you must have limited resources (cash savings, retirement funds, etc.).
Some people avoid building assets and saving up money, because they are afraid they’ll lose their benefits. Now, people with disabilities and their families can save money in an ABLE savings account without affecting SSI and other benefits, including:
- Medicare Savings Programs
- The Medicare Part D Extra Help/Low Income Subsidy (LIS), and
- SNAP.
The goal of an ABLE account is to give people with disabilities more independence and financial security.
If you have a job, you can save money in your ABLE account without any changes in your benefits. An ABLE account also lets family and friends give you money without affecting your benefits. And any interest or other growth in the account is tax-free, as long as you spend the money from your ABLE account on disability-related expenses.
Generally, if you get SSI benefits, the help you get to pay for food and shelter (housing) may cause you to get lower monthly benefits. For example, if you are single, the most you can usually get in SSI benefits is $914 per month, but if your parents are helping you with your rent and your food, your maximum SSI benefits might go down to $609.33. However, if your parents put money into your ABLE account, you can use the money from your ABLE account for food and shelter and your SSI benefits won’t be affected. That could make a big difference in your monthly benefits!
Note: If you want to use money from your ABLE account for housing-related expenses, make sure you take out and spend the money in the same month. Learn more about ABLE account spending rules.
Tax Benefits
ABLE accounts can have three tax benefits:
- The growth of your investments isn’t taxed,
- If you work and save earned income in your ABLE account, you may qualify for the federal Saver's Credit.
- If you have your ABLE account with Colorado ABLE, starting in 2023 you may get a state tax deduction for any contributions you make to your account.
1. Untaxed Growth of Investments
ABLE programs typically offer multiple investment options, letting you choose from various mutual fund plans (which offer greater rewards but can go up or down, depending on the market), or savings accounts (which pay low interest, but are guaranteed by the federal government). You pay no income taxes on any growth in the value of your investments or any interest earned on your savings — so your wealth may grow faster.
However, any money taken out of an 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 qualified disability-related expenses, you may have to pay income tax plus a 10% penalty.
2. Saver's Credit
If you work and save some of your earned income in an ABLE account, when you file your federal taxes you may get the Saver’s Credit (also called the Retirement Savings Contributions Credit). The Saver's Credit cuts the amount you pay in taxes.
Deposits to any ABLE account will only qualify you for the Saver's Credit if you:
- Owe taxes
- Put money from your earned income into the ABLE account (money from other sources, like family or friends, doesn’t count), and
- Are not also making contributions to a retirement plan. (Though you may separately qualify for the Saver’s Credit based on your retirement contributions.)
There are other requirements to get this credit. Learn more about the federal Saver’s Credit.
3. State Tax Deduction
If you have your ABLE account with the Colorado ABLE program, starting in 2023 you may get a state tax deduction for any contributions you make into your account. For details, contact a tax expert or the Colorado Department of Revenue Taxpayer Helpline at 1-303-238-7378.
ABLE accounts and Special Needs Trusts
A trust is a legal arrangement in which a person or organization manages assets for you (the beneficiary), with the trust's assets used to pay for your expenses. A Special Needs Trust holds assets for a person with a disability. If you have a Special Needs Trust, you may want to also open an ABLE account.
An ABLE account:
- Is easier (and cheaper) to open and manage than a trust, but your disability must have begun before you turned 26
- Provides tax benefits (as long as any money withdrawn is spent on qualified disability-related expenses)
- Gives you more control and more choices.
- Doesn't make you have a trustee manage the account, as you have to do with a Special Needs Trust. Instead, you can manage your own account or ask someone to help oversee and manage your ABLE account.
- Lets you use the money for housing expenses without making your SSI benefits go down
- May let you use a debit card to pay for qualified disability-related expenses (Colorado ABLE does this), instead of having to ask each time you want to take money out of the account.
- Has limits on how much money can be deposited in the account each calendar year.
If you get SSI benefits, your SSI stops any time you have more than $100,000 in your ABLE account. Plus, each state stops letting you deposit money into your ABLE account after it reaches a certain level ($200,000 – $500,000 or more, depending on the state), until your account balance drops back down. For Colorado ABLE, the contribution limit is $400,000.
A Special Needs Trust:
- Has no limits on contributions
- Does not require that your disability began before you turned 26
- May offer tax benefits
Learn more about Special Needs Trusts.
The bottom line: Because there are limits on how much you can put into your ABLE account each year, you cannot replace a trust with an ABLE account. Instead, they can both be part of your overall financial plan.
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Do I Qualify for an ABLE Account?
To open an ABLE account, you must have a disability that began before you turned 26 and that meets the Social Security Administration’s (SSA) standards. (SSA has different disability standards for children, for adults, and for blindness.)
You definitely qualify for an ABLE account if you get benefits from programs that use SSA’s disability standards. This includes Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Childhood Disability Benefits (CDB), Health First Colorado (Medicaid) if it is based on your disability, or the Health First Colorado Buy-In Program For Working Adults With Disabilities (Medicaid Adult Buy-In).
Karen is first hospitalized with schizophrenia at 16. She starts getting SSI at 24 when her illness makes it impossible for her to keep working full-time. At age 30, Karen is able to work part-time for a few hours a week while keeping her health benefits under the Medicaid Adult Buy-In.
Karen opens an ABLE account, which lets her save some of her earnings each month without affecting her benefits. Her parents deposit another $200 a month into Karen’s ABLE account, also without affecting Karen’s benefits. At the end of 12 months, Karen has $4,000 in her ABLE account. Karen can keep that money in her ABLE account and let it continue to grow or spend it on disability-related expenses, like housing, training, or transportation.
If you don’t get disability-based benefits, you can still qualify for an ABLE account by “self-certifying” that your disability meets SSA’s standards. To do this, a doctor must document the fact that your disability meets SSA’s standards, but with one major difference. Instead of saying that your disability limits your earnings, for self-certification for an ABLE account, the doctor must verify that your disability causes “marked and severe functional limitations.”
Generally, this means that your disability must be on Social Security’s List of Impairments or be at least as severe as an impairment that is on that list. Conditions on Social Security’s list of Compassionate Allowances Conditions also usually qualify.
Note: You should get a new document from your doctor each year. If you are self-certifying your disability, the Colorado ABLE program requires you to have a current annual document, but you do not have to submit it to Colorado ABLE each time.
At 25, Carlos is hit by a car and becomes quadriplegic. He has some savings in the bank, so he doesn’t qualify for SSI benefits. Carlos wants to invest some of his money in an ABLE account to take advantage of the tax benefits, so his doctor documents the fact that Carlos meets the SSA adult disability guidelines.
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Opening an ABLE Account
You can only open an ABLE account if your disability began before you turned 26 and meets the Social Security Administration’s (SSA) standards. (SSA has different disability standards for children, for adults, and for blindness.)
If you meet these rules, an ABLE account is easy and inexpensive to set up, and you don’t have to use a lawyer or other advisor.
The ABLE account is in your name, with you listed as the owner of the account (also called the designated beneficiary). You can open your own ABLE account or, if needed, a parent, a legal guardian, or someone with a valid power of attorney can open it for you.
ABLE programs are set up by each state. Colorado's ABLE account program is Colorado ABLE.
States post their ABLE program details online, which generally includes how to apply or enroll online. Usually, you do not need to live in a particular state to open an ABLE account there.
You need to deposit a minimum amount to open an account, typically $25 – $50 (but it varies by state). You may also have to pay fees for maintaining an account or other services.
Each state offers several different investment strategies, including mutual fund accounts and federally insured savings accounts. An ABLE program might offer anywhere from 4 – 15 or more different options. It might help to get financial advice from an accountant, financial planner, or other professional as you compare different state ABLE programs, so you can pick the one that works best for you.
How Do I Choose an ABLE Program?
If you qualify for an ABLE account, you can open one in any state that offers accounts nationwide — it’s your choice. Each state has the option to offer its ABLE program nationwide or only to state residents, so you need to check which states let you open an ABLE account.
You are only allowed one ABLE account, so you need to compare the different programs and decide which state offers the account that is best for you.
But don’t worry; you don’t have to stay with the first state program you choose. You can switch your ABLE account from one state to another. You may have to pay minor fees to transfer your money. And you can change your investment strategy within the same state program up to two times each year.
The ABLE National Resource Center lists details about each state’s ABLE program.
Here are some things to think about when comparing state ABLE programs:
- What is the minimum amount needed to open an ABLE account, and is there a fee for opening an account? Are there any monthly or annual fees?
- How easy is it to put money into the account and take money out for qualifying expenses? For example, can you get money by electronic transfer or do you get a paper check? How long does this take? Does the account come with a prepaid debit card that you can use anywhere, at any time? Are there any extra fees for having a debit card?
- How good is the customer support? Try calling or emailing the program to see whether it’s easy to get someone to respond, and if that person seems helpful.
- Do the investment options meet your needs? Each state offers multiple investment choices, like mutual funds or savings accounts. Some investments may offer better returns than others, but may come with a greater risk, and the amount in your account can drop when the stock market drops. (Under the federal ABLE rules, you can change your investment options twice in a calendar year.)
- Are there any extra benefits for people living in your state? Some states give extra tax benefits for residents of that state. If you live in Colorado and have your ABLE account with Colorado ABLE, you may get a state tax deduction for any contributions you make.
- What is the most you can put into the account and still make deposits? Each state has a contribution limit at which they stop letting you make deposits. This limit ranges from $200,000 – $500,000 or more, depending on the state. For the Colorado ABLE program, the contribution limit is $400,000. (You don't need to worry about this until your account gets close to this level.)
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Rules for Making ABLE Deposits
Here are some important rules to think about related to putting money in an ABLE account:
- There are limits on how much you can deposit each year.
- You can’t make any more deposits if the total amount of your contributions goes over a certain level, until your account balance drops back down. For the Colorado ABLE program, the maximum contribution amount is $400,000.
- You can move money from a 529 education account into an ABLE account.
These rules are explained in more detail below.
1. Yearly Deposit Limits
There are two limits on how much money can be put in your ABLE account each calendar year:
- Up to $17,000 in total deposits can come from any source — you, your family and friends, your benefits, and other unearned income, and
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If you have a job, you can deposit another $13,590 of your own earned income into your account. The $13,590 must be from your own earnings, and if you earn less than $13,590, the amount you can contribute would be lower.
- 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.
Combined, this means that if you work, you could save as much as $30,590 in your ABLE account in 2023.
You may need to make sure that too much money isn’t contributed into your account (even if it is other people making the deposits). Colorado ABLE will automatically stop accepting deposits for the rest of the year once $17,000 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.
Sam gets Supplemental Security Income (SSI) and Health First Colorado (Medicaid) benefits. He doesn’t work, so he has no earned income.
Sam’s mother helps him by putting $500 a month into Sam’s ABLE account. Sam’s done the math and knows that by the end of the year, his mother will have deposited a total of $6,000. Sam’s brother also helps out, by making a big $5,000 deposit into Sam’s ABLE account in February. Combined, his mother and brother will put $11,000 into Sam’s ABLE account over the course of the year.
Under ABLE account rules, the most Sam or anyone else deposits can only add up to $17,000. Since Sam already knows that $11,000 is going to be deposited, that means only $6,000 in other money can be added to the account this year.
2. Deposit Limit if Your ABLE Account Has a Lot of Money
Each state sets a maximum amount that can be in an ABLE account, which might be $200,000 – $500,000 or more. For the Colorado ABLE program, the limit is $400,000. If your ABLE account balance reaches the maximum amount, you cannot make any more deposits until the account balance drops back down. Note: This limit doesn’t affect many people.
Evelyn has an ABLE account in a state that doesn’t allow any more deposits if the total in her account is $400,000 or more. Right now, Evelyn only has $5,000 in her ABLE account. Even if she and her family and friends deposit the maximum amount allowed for many years, she still won’t be close to the $400,000 limit.
3. Moving Money from 529 Accounts to ABLE Accounts
529 accounts are a type of account that lets people save money for college or other educational expenses. They work very similarly to ABLE accounts. In fact, they are so similar that ABLE accounts are officially called “529A accounts.”
Money from a 529 account can be rolled over tax-free into an ABLE account. That means money can be moved from a 529 account and into an ABLE account with no penalties. In this way, money that hasn’t been or won’t be used for educational expenses can instead be used for any qualified disability-related expenses from an ABLE account.
Here are a couple of important things to understand about rolling money over from a 529 account to an ABLE account:
- The 529 account must be in the name of the ABLE account owner or a family member, and
- The rollover counts toward the ABLE account annual deposit limit for all sources other than your own earned income ($17,000 in 2023).
Maria has $10,000 in a 529 educational savings account her parents set up when she was younger. Now 25, Maria isn’t in school anymore and doesn’t plan to return to school. If she just takes the money out of the 529 account and spends it on other things, she’ll have to pay taxes and a penalty.
But instead, Maria rolls over the $10,000 tax-free from the 529 account into an ABLE account, which she can open because she’s legally blind. Now, she can use the money on disability-related expenses without paying taxes or penalties.
Maria remembers to write down that she has already deposited $10,000 for 2023 into her account, so that she can make sure not to go over the $17,000 annual limit on contributions from sources other than her own earnings.
Since she has a job, Maria knows that she can separately deposit up to $13,590 from her earnings into her ABLE account.
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Rules for Spending ABLE Money
You can spend the money in your ABLE account on any “qualified disability expense.” This can include:
- Housing (which can be mortgage payments, property taxes, rent, furniture, heating fuel, gas, electricity, water, sewer, or garbage removal)
- Transportation (including gasoline and car repairs, public transportation, paratransit, and taxis)
- Medical expenses, prevention, and wellness (including insurance premiums and copays)
- Education
- Employment training and support
- Assistive technology and personal assistance services
- Financial management and administrative services
- Legal fees
- Basic living expenses
It’s your job to make sure an expense qualifies, and to keep records of how you use your ABLE account money. If you are audited by the Internal Revenue Service (IRS), you will need to show them how you’ve used any money from your ABLE account. Keep all of your receipts. You can put your receipts for ABLE into a binder, or scan them and save them on your smartphone, tablet, laptop, or computer.
If you take money out of your ABLE account but do not use it for qualified disability expenses, you might have to pay federal income tax on that amount, plus a 10% penalty, and it could affect Supplemental Security Income (SSI) and other benefits.
In June, Eric takes $7,000 out of his ABLE account to pay his college tuition, which is due in September. He puts the money in his checking account, so he can pay the tuition in September. In August, Eric gets a job offer and decides not to return to school. He has to spend the $7,000 on qualified disability expenses. If Eric keeps the money but can’t show that he spent it on qualified expenses, his SSI and other benefits may be affected. He may also have to pay income tax and a 10% penalty on the amount.
The rules are stricter for housing-related expenses. If you take money out of your ABLE account for housing-related expenses, you must spend that money in the same month you took it out of the account.
On May 26, Amy takes $500 out of her ABLE account and puts it into her regular checking account so she can pay her June rent. On May 31, she takes out $500 in cash from her checking account and pays her landlord, who gives her a receipt dated May 31. Everything is fine, because she used the money for housing expenses during the same month she took it out of her ABLE account.
But if Amy doesn’t pay her landlord until June, the $500 housing-related ABLE money that is in her checking account on June 1 will be a countable resource and may affect her benefits.
Some states require you (or your parent, guardian, or agent) to prepare a withdrawal request saying how the money will be used for qualified disability expenses, and it can take 5 – 10 business days for you to get the money.
Other state ABLE programs offer a prepaid debit card that lets you (or your parent, guardian, or agent) load specific amounts from your ABLE account onto the card. You can then use the card to pay for qualified disability-related expenses up to the amount loaded on the card (but you still need to keep your receipts to document how you spent the money). You need to spend the amount loaded on the card on qualified expenses by the end of each year. If you don’t, it may affect your SSI benefits, and you may have to pay income tax and a 10% penalty.
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.
Jordan transfers money out of his ABLE account in August and loads it onto the prepaid debit card that came with his account. He uses the card to buy gasoline, pay for car maintenance and repairs, and other transportation-related expenses. But in October, Jordan’s schedule changes, and he uses his car a lot less. By December, he still has quite a bit of ABLE money loaded on his debit card. Before the end of the year, Jordan must spend the ABLE money on a qualified disability expense or he may have to pay the income tax and 10% penalty, and his SSI and other benefits may be affected.
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Example
Brittany’s Story
Brittany becomes paraplegic at age 22 after a rock climbing accident. Now 31, she lives with a roommate in an accessible apartment, works a part-time job as an office clerk, and gets Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), and Health First Colorado (Medicaid) benefits.
She has a van that has been adapted so she can use it, but she knows it’s aging and won’t last forever. Brittany wants to be able to start saving up for a better vehicle, but she worries that if she saves more than $2,000, she’ll lose her SSI benefits.
Her parents are willing to help her with the cost, but Brittany worries that their gift will also count against her benefits.
Sometimes Brittany’s supervisor asks her to work a few extra hours, which would mean a little extra money — but Brittany usually says no because she worries she’ll have too much money in her checking account at the end of the month, putting her over SSI’s resource limit.
Brittany feels like she can never get ahead, and that she’s always one step away from a minor disaster, like a car repair she can’t afford.
Then, at a monthly support group that Brittany attends, someone mentions how ABLE accounts let people with disabilities save some money without losing SSI and other benefits. The person doesn’t know a lot of details, but thinks you have to be younger than 26 to open an account. Brittany’s heart sinks when she hears that, but she decides to check it out anyway.
Learning More
Brittany decides she needs to get expert advice, so she calls a benefits planner for SSI. She’s connected with Pam, who asks how she can help.
Brittany explains her situation, and says she heard there might be a savings program for people with disabilities, but isn’t sure she qualifies. Pam says yes, the ABLE program helps people with disabilities be more independent and financially secure.
“But don’t I have to be younger than 26 to open an ABLE account?” Brittany asks.
“It doesn’t matter how old you are now, as long as your disability began before you turned 26,” Pam explains. “Because you were 22 when your disability began, and you get SSI benefits now, you definitely qualify for an ABLE account. And the money you save in your ABLE account won’t affect your benefits from Health First Colorado (Medicaid) either.”
Brittany asks if there are any limits on ABLE accounts, and Pam explains that there are two limits on how much can be put into an ABLE account in a single calendar year — up to $17,000 from any source (including your family and friends, your benefits, and other unearned income) and, if you have a job, another $13,590 from your own earned income. As long as the account balance is less than $100,000, the money saved won’t affect SSI benefits."
Brittany laughs, “I can’t imagine being able to save $30,590 in a single year, or ever having $100,000 in an account! Still, this is good stuff to know.”
Pam explains that any growth in an ABLE account is tax-free and, if Brittany is saving money from her earned income, she might qualify for the Saver’s Credit when she files her federal income taxes. And if Brittany opens her ABLE account with the Colorado ABLE program, she might also get a state tax deduction for any contributions she makes to her account.
Pam adds that it’s important to remember that any money taken out of the account must be used to pay for disability-related expenses.
“Oh, does that only mean medical expenses?” Brittany asks. “I really want to save up for a new van.”
“You can do that,” Pam says. “Qualified ABLE expenses include transportation, housing, health and wellness, education, employment training and support, assistive technology, personal assistance services, and basic living expenses.”
Getting Started
Brittany asks what she has to do to open an ABLE account. Pam explains that each state can set up an ABLE program, and mentions that Colorado's ABLE account program is Colorado ABLE.
“Oh, do I have to open my account in Colorado’s program?” Brittany asks.
“No, you can open an account in any state that offers ABLE accounts nationwide. But you can only have one ABLE account at a time, so you need to choose the state program that works best for you,” Pam says.
Pam directs Brittany to the ABLE National Resource Center website, where Brittany can find states that offer ABLE accounts nationwide, and compare their programs.
Brittany asks Pam a few more questions. Then she gets off the phone so she can start researching state ABLE programs.
When she has the details she needs, Brittany meets with her parents to go over what she has learned, and to discuss possible investment strategies. They ask their family financial planner a few questions, then Brittany picks an ABLE account program, and enrolls online.
Her parents set things up to automatically put $200 a month into Brittany’s account, to help her save up for a new van. And Brittany now says yes whenever her supervisor offers her a little extra work, because she can put the extra money into her ABLE account. Brittany keeps track of both her own contributions and the money from her parents. At the end of the year, Brittany has about $6,000 in her ABLE account.
Brittany now has an ABLE plan in place that will let her save money to buy her next van and other things she might need, and she worries less about her future.
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Frequently Asked Questions
What is 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, 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 federal Saver's Credit, and if you have your account with the Colorado ABLE program, you may also get a state tax deduction for contributions to that account. 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.
How do I qualify for an ABLE account?

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.”
Why should I open an ABLE account?

There are two basic reasons for opening an ABLE account:
- 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
- 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.
How do I 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.
How do I choose an ABLE account program?

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)
Can I have more than one 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.
How much money can I have in an ABLE account?

The most you, your family, or your friends — combined — can deposit in your ABLE account each year is $17,000. If you have a job, you can deposit another $13,590 of your own earned income into your account. This means that if you work, you could save as much as $30,590 in your ABLE account in 2023.
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.
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.
Who can deposit money in my 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 $17,000 from any source (including your family and friends, your benefits, and other unearned income)
-
Up to another $13,590 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.
How do I deposit money in an 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.
How can I take money out of 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.
What can I spend ABLE account money on?

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.
What are the tax benefits of an ABLE account?

ABLE accounts can have three tax benefits:
- The growth of your investments isn’t taxed, and
- If you work and save earned income in your ABLE account, you may qualify for the federal Saver’s Credit
- If you have your ABLE account with Colorado ABLE, you may also get a state tax deduction for contributions you make to your account.
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 penalty.
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Common Pitfalls
You take money out of your ABLE account but don’t spend it on “qualified disability expenses”
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.
You (or others) deposit too much in your ABLE account in a single calendar year
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 $17,000 from any source, including your family and friends, your benefits, and other unearned income, and
-
Another $13,590 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 $17,000 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.
You don't keep track of the deposits that others make in 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 $17,000 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.
You get SSI and let the balance on your ABLE account go over $100,000
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.
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Next Steps
Learn More About ABLE Accounts
Colorado's ABLE account program is Colorado ABLE.
The ABLE National Resource Center website includes:
- An overview of ABLE accounts
- Recorded webinars about different aspects of ABLE accounts
- A map showing which states offer ABLE programs, with details about those programs.
The Internal Revenue Service (IRS) provides an overview of ABLE accounts and Tax Highlights for Persons with Disabilities.
Ticket to Work
Social Security’s Ticket to Work Program helps people with disabilities who get Social Security benefits re-enter the workforce and become more independent. The Ticket to Work Program offers free access to employment-related services, such as training, transportation, and vocational rehabilitation. You can call the Ticket to Work Help Line at 1-866-968-7842 or 1-866-833-2967 (TTY).
Get Help with Your Benefits
A trained Benefits Planner can help you understand your benefits programs. Exactly who you need to contact depends on your situation and the benefits you get.
View DB101's full list of experts who can help you understand different benefits.
Learn more
Building Your Assets and Wealth
Discover ways to save up money while working.
Finding the Right Job for You
Get some tips and resources that make it easier to find a job or career.
How Health Benefits Work
Learn about the different ways you may be able to get health coverage.