HB 22-1320

HB 22-1320, also known as the ABLE Savings Accounts Act in Colorado, allows individuals with disabilities who were diagnosed before age 26 to open special savings accounts that can be used for disability-related expenses without affecting their eligibility for federal benefits. The bill lets family members or friends open and manage these accounts on behalf of someone with a disability. It also ensures the state won’t claim funds from these accounts after the account owner passes away, as long as the money was used for qualified expenses. Additionally, it provides tax deductions for contributions made to ABLE savings accounts for three years starting in 2023. The bill has been signed into law and is now active.

Official Summary

The collegeinvest authority administers the achieving a better life experience (ABLE) savings program. Individuals who were declared disabled, as defined under federal law, before reaching 26 years of age are eligible to open an ABLE savings account. ABLE savings accounts under section 529A of the internal revenue code are modeled after section 529 college savings accounts, but, unlike those accounts, ABLE savings accounts may be used to save for many expenses related to an individual's disability without disqualifying the individual for certain federal benefits. The act modifies the administration and operation of these accounts in 2 ways. First, the act allows a person other than the individual with a disability to open an ABLE savings account for the individual and to have signature authority over that account. Second, the act prohibits the state from filing a claim against the ABLE savings account upon the account owner's death for outstanding payments due for qualified disability expenses. The act also modifies the tax benefits associated with an ABLE savings account for the 2023, 2024, and 2025 tax years. Under the act, a taxpayer may deduct from their federal taxable income for purposes of calculating their state taxable income certain contributions made to an ABLE savings account. Further, the act ensures that a taxpayer does not encounter tax recapture of any deductions claimed for these contributions when distributions are made from an ABLE savings account for qualified disability expenses. $44,517 is appropriated from the general fund to the department of revenue for the implementation of the act. (Note: This summary applies to this bill as enacted.)

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