Section 1 Short title
This Act may be cited as the “ABLE Employment Flexibility Act”.
ABLE Employment Flexibility Act
A BILL
To amend the Internal Revenue Code to allow employers to contribute to ABLE accounts in lieu of retirement plan contributions.
Sec. 2 Protecting working able individuals from losing benefits because of retirement plan rules
In general— Section 414 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(aa) ABLE account contributions
“(1) In general—An applicable employer plan (as defined in subsection (v)(6)(A)) that is a defined contribution plan shall not be treated as failing to meet any requirement of this title solely because the plan provides that an eligible ABLE individual may elect for a plan year that employer contributions that would otherwise be made under the terms of the plan for such plan year shall (in lieu of contribution to the plan) be contributed by the employer to a qualified ABLE program described in section 529A on behalf of such eligible ABLE individual.
“(2) No deduction for amounts contributed to able account—Except as provided in paragraph (4), amounts contributed pursuant to the election under paragraph (1) to a qualified ABLE program shall not be treated as a contribution to an applicable employer plan.
“(3) Universal availability—Paragraph (1) shall not apply unless the plan provides the election described therein is available to all eligible ABLE individuals who are eligible to participate in the plan.
“(4) Application of nondiscrimination rules—Under rules prescribed by the Secretary, for purposes of applying sections 401(a)(4), 401(k)(3), 401(k)(12), 401(k)(13), 401(m)(2), 403(b)(12), 408(k)(3), 408(p)(2)(iii), 408(p)(2)(B), 410, and 416, contributions made to a qualified ABLE program pursuant to the election made described in paragraph (1) shall be treated as if such contributions were made to the plan.
“(5) Cash or deferred arrangement—A plan shall not fail to include a qualified cash or deferred arrangement described in section 401(k)(1) solely because such plan provides for the election described in paragraph (1).
“(6) Eligible able individual—For purposes of this subsection, the term “eligible ABLE individual” means an employee who, as of the first day of a plan year, is an eligible individual within the meaning of section 529A(e)(1) for the taxable year containing such first day of the plan year.
“(7) Treatment of permissive withdrawals—An eligible ABLE individual may direct that amounts eligible for withdrawal from an eligible contribution arrangement pursuant to section 414(w) be contributed to a qualified ABLE program described in section 529A on behalf of such eligible ABLE individual.”
Treatment as beneficiary contribution— Section 529A(b)(7) of such Code is amended by redesignating subparagraph (B) as subparagraph (C) and inserting as subparagraph (B):
“(B) Employer contributions—Contributions made to a qualified ABLE program by an employer on behalf of a designated beneficiary described in this paragraph pursuant to paragraph (1) or (6) of section 414(a)(a) shall be treated as made by the designated beneficiary for purposes of paragraph (2)(B)(ii).”
Clarification of availability of employer contributions— Section 529A(e) of such Code is amended by adding the following paragraph (7) at the end thereof:
“(7) Employer contributions—An employer of an eligible individual may contribute to any qualified ABLE program for which the eligible individual is the designated beneficiary, including through a contribution matching a contribution made by such eligible individual to the qualified ABLE program.”
Deduction for contributions remitted by employer a qualified ABLE program— No later than 1 year after enactment, the Secretary of the Treasury shall—
amend Treasury Regulations under section 162 of such Code to confirm that contributions made by an employer to a qualified ABLE program described in section 529A of such Code on behalf of a eligible ABLE individual described in section 414(aa)(5) of such Code who provides personal services to such employer shall be considered a reasonable allowance for salaries or other compensation for personal service if such contribution for a year, taking into account all other contributions to such qualified ABLE program does not exceed the maximum contribution described in section 529A(b)(2)(B) of such Code; and
update the publications issued for employers to encourage employers offering a retirement plan with automatic enrollment to notify employees that elect not to contribute to the plan and that may be eligible to contribute to a qualified ABLE program to notify such employee of the possibility of a contribution under section 529A(b)(2)(B)(ii) of such Code.
Effective date—
In general— Except as provided in paragraph (2), the amendments made by this section shall be effective for plan and taxable years beginning after enactment.
Clarifications— Subsections (c) and (d)(1) shall be effective for plan and taxable years beginning before, on, and after enactment.