ABLE Employment Flexibility Act
Summary
The ABLE Employment Flexibility Act amends the Internal Revenue Code of 1986 to allow employers to contribute to Achieving a Better Life Experience (ABLE) accounts in lieu of retirement plan contributions for eligible individuals with disabilities. This bill aims to provide greater financial flexibility for individuals with disabilities by allowing them to save in ABLE accounts without losing retirement benefits. It also clarifies that employer contributions to ABLE accounts are considered compensation and are deductible for employers.
Expected Effects
This act will enable employees with disabilities to elect to have employer contributions directed to their ABLE accounts instead of retirement plans. This could increase savings in ABLE accounts, potentially impacting eligibility for means-tested federal programs. The Secretary of the Treasury is required to update regulations and publications to reflect these changes.
Potential Benefits
- Allows employees with disabilities to choose ABLE account contributions over retirement plan contributions.
- Clarifies the treatment of employer contributions to ABLE accounts for tax purposes.
- Encourages employers to inform employees about the option to contribute to ABLE accounts.
- Provides greater financial flexibility for individuals with disabilities.
- Disregards ABLE contributions for means-tested federal programs, protecting eligibility.
Potential Disadvantages
- May reduce retirement savings for some individuals with disabilities if ABLE contributions are prioritized over retirement contributions.
- Could create administrative complexities for employers in managing ABLE account contributions.
- Potential for misuse or misunderstanding of the ABLE account contribution option.
- Requires regulatory updates and employer education, which may take time and resources.
- The impact on long-term financial security for individuals needs careful consideration.
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution, as it aims to improve the financial well-being of individuals with disabilities. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8). The bill modifies the tax code to incentivize employer contributions to ABLE accounts, which falls under Congress's authority. There are no apparent conflicts with individual rights or freedoms outlined in the Constitution or its amendments.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).