H.R. 4644: ABLE Employment Flexibility Act

This bill, known as the ABLE Employment Flexibility Act, aims to amend tax rules related to employer contributions for certain savings accounts called ABLE accounts. ABLE accounts are designed to help individuals with disabilities save money without losing eligibility for significant government benefits. Here’s what the bill proposes:

Key Provisions

• Employer Contributions to ABLE Accounts: Employers would be allowed to make contributions directly to an ABLE account on behalf of an eligible employee instead of contributing to a traditional retirement plan. This is aimed at providing more flexibility for individuals with disabilities to save for their future.
• Eligibility: The bill sets guidelines that ensure all eligible ABLE individuals can opt for this contribution option. To qualify, an employee must meet specific criteria defined in the current rules about ABLE accounts.
• Treatment of Contributions: Contributions made to the ABLE accounts under this new provision would not be considered part of the retirement plan contributions, so they won't affect benefits tied to that plan. This is meant to protect the eligibility of individuals receiving means-tested benefits.
• Matching Contributions: Employers may also make matching contributions to an ABLE account if the employee has made contributions themselves, further promoting savings for eligible individuals.
• Regulatory Updates: The Secretary of the Treasury is required to update regulations to confirm that these contributions are considered reasonable expenses for salaries. This clarification aims to ensure that employers can get tax deductions for these contributions.
• Disregarding Contributions for Benefits Eligibility: Contributions made to the ABLE accounts will not be counted when determining eligibility for other federal benefits. This is intended to allow individuals with disabilities to save money without risking their access to crucial assistance.
• Effective Date: The changes proposed would apply to plan years starting after the enactment of the bill, with some provisions applying immediately or retroactively.

Impact on Employers

Employers offering retirement plans would need to adjust their plans to provide this option for employees. They will need to ensure compliance with new guidelines, which may require administrative adjustments and updates to their employee benefit communications.

Model Amendments

The bill directive requires creating model amendments that employers can adopt to implement these new provisions easily. This aims to simplify the process for companies looking to offer contributions to ABLE accounts.

Eligible Individuals

Eligible individuals are defined as employees who meet the criteria set forth in the current regulations governing ABLE accounts. This allows for a wider range of employees with disabilities to benefit from these provisions.

Relevant Companies

• None found