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How to find the money to put in an ABLE account

New to an ABLE account? Here are 6 ways to fund it.

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A federal law passed in 2014 called the Achieving a Better Life Experience (ABLE) gives people who become disabled before the age of 26 the right to establish tax-advantaged savings accounts. Called ABLE accounts, these special accounts give people with disabilities the opportunity to save money for spending on qualified disability expenses without impacting their eligibility for federal programs such as Supplemental Security Income (SSI) and Medicaid.

Have you just opened an ABLE account? Here are some ways to fill it fast with money you can use for qualified disability expenses. These six recommendations come from the ABLE National Resource Center.

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1. Personal earnings

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Depositing your work earnings is a great way to add money to an ABLE account.

Do you have a job? An ABLE account is a great place to stash your work cash. So deposit as much of your paychecks as you can. You can only contribute up to $16,000 a year if you don’t have a job. But if you are employed, then your contribution threshold is considerably higher. You can save an additional $12,880 if you live in the continental U.S., $16,090 if you live in Alaska, and $14,820 if you live in Hawaii. But you won’t be able to make these additional contributions if your employer contributes to a workplace retirement plan on your behalf. Instead, you’ll be limited to contributing no more than $16,000 a year.

2. Money from family and friends

Parents, other family members, and near and dear friends may wish to support you financially. Putting money in an ABLE account is a great way to do it. So accept their financial contributions with aplomb.

3. Money from a special needs trust

A special needs trust is a legal trust that parents may create for a son or daughter with special needs as the beneficiary. The money stashed in a trust won’t affect their eligibility for SSI and Medicaid. If your parents created such a trust for you, you can use money from the trust to fund your ABLE account.

4. Money from lump sum payments

If you receive a lump sum amount, such as an inheritance, your ABLE account is a perfect place for it. If you have a job where you get paid sporadically or receive a bonus, it is a good idea to take that pay when it comes and put it in your ABLE account.

5. Money from tax refunds

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Credit: Reviewed/ Getty Images / Khanchit Khirisutchalual

Money from a federal tax refund can be used to fund an ABLE account.

If you received a nice tax refund from Uncle Sam, an ABLE account is a good spot for it. In fact, you will want to get in the habit of depositing your tax refund into your ABLE account every year.

6. Rollover from a 529 plan

If you, your parents, or other family members have a 529 plan for college savings, you can roll over this money into an ABLE account, not to exceed $16,000 a year with your other ABLE account contributions.

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