ABLE Employment Flexibility Act

The ABLE Employment Flexibility Act would create a new option for employers that maintain defined contribution retirement plans: in a given plan year, an eligible employee who has an ABLE account could elect to have contributions that would otherwise go to the retirement plan be deposited by the employer into the employee’s qualified ABLE program (529A) instead. The bill designs the transfer to treat these employer ABLE contributions in a way that preserves plan rules (including nondiscrimination tests) and ensures the election is universally available to all eligible ABLE individuals in the plan. It also broadens the concept of employer contributions to ABLE programs, clarifies tax and compensation treatment, directs the Treasury to issue guidance and model plan amendments, and preserves protections for means-tested federal programs (treating ABLE contributions as disregarded for eligibility and benefits). In short, the bill is aimed at giving employees with disabilities greater flexibility to fund ABLE accounts through their employer’s retirement plan structure, while maintaining tax and plan compliance rules and ensuring such contributions don’t adversely affect means-tested benefits.