ABLE Employment Flexibility Act

This bill lets workers who qualify for ABLE accounts choose to have their employer’s retirement-plan contribution put into their ABLE account instead, without causing problems for the company’s plan rules. Employers may also contribute to an employee’s ABLE account (including matching the employee’s own ABLE contribution), and those employer dollars are treated as if the worker contributed them for ABLE purposes. Money an employer puts into an ABLE account under this option will not count as income for certain federal benefit programs that look at your finances, helping protect eligibility for those benefits while you keep, add to, or use the ABLE account.

The bill also asks the Treasury to provide model plan language and clarify tax rules so employers can treat these ABLE contributions as normal compensation costs within annual ABLE limits, and to update employer guidance about automatic enrollment and ABLE options.

• Who is affected: Workers who are eligible for ABLE accounts and employers that offer defined contribution retirement plans.
• What changes: Employees can elect employer contributions to go to an ABLE account instead of the retirement plan; plans must make this option available to all eligible ABLE employees; certain allowed withdrawals from automatic enrollment can be directed into an ABLE account; employers can contribute to any ABLE program for which the worker is the beneficiary, including matches; and federal benefit programs must disregard these ABLE contributions when deciding eligibility and amounts .
• When: Most changes apply to plan and tax years after the bill becomes law; some clarifications apply to years before, on, or after enactment.