Rules for Making ABLE Deposits

Here are some important rules to think about related to putting money in an ABLE account:

1. There are limits on how much you can deposit each year.
2. 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 $500,000.
3. 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 $18,000 in total deposits can come from any source — you, your family and friends, your benefits, and other unearned income, and
• If you have a job, you can deposit another $14,580 of your own earned income into your account. The $14,580 must be from your own earnings, and if you earn less than $14,580, 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 $32,580 in your ABLE account in 2024.

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 $500,000. 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.

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 ($18,000 in 2024).