Section 1 Short title
This Act may be cited as the “ABLE Tomorrow Act”.
ABLE Tomorrow Act
A BILL
To amend the Internal Revenue Code of 1986 to make expiring ABLE provisions permanent, improve accessibility and education for families, and for other purposes.
Sec. 2 ABLE account improvements
Increased contribution limit made permanent— Section 529A(b)(2)(B)(ii) of such Code is amended by striking “before January 1, 2026”.
Repeal of transfer to State upon death of designated beneficiary— Section 529A(f) of such Code is amended to read as follows:
“(f) Prohibition on State adjustment or recovery of medical assistance—Notwithstanding any other provision of law, no State may seek adjustment or recovery of any medical assistance correctly paid on behalf of a designated beneficiary under a State Medicaid Plan from the ABLE account of such designated beneficiary, regardless of whether the ABLE account is part of the designated beneficiary’s estate.”
Rollover from 529 account to ABLE account made permanent—
In general— Section 529(c)(3)(C)(i)(III) of such Code is amended by striking “before January 1, 2026,”.
Repeal of limitation on amount— Section 529(c)(3)(C)(i) of such Code is amended by striking the matter following subclause (III).
Exception to contribution limit for certain lump sum payments—
Section 529A(b) of such Code is amended by adding at the end the following new paragraph:
“(8) Exception to contribution limit for certain lump sum payments
“(A) In general—In the case of a contribution to a qualified ABLE program from a third-party trust, a contribution of amounts received by the designated beneficiary as proceeds of a life insurance contract, or an amount distributed from a qualified tuition program (as defined in section 529(b)(1)) that is not includible in gross income of the distributee under section 529(c)(3)(C)(i)(III), subsection (b)(2)(B) shall not apply.
“(B) Limitation—Subparagraph (A) shall not apply with respect to any contribution if such subparagraph has applied to any other contribution in any taxable year to a qualified ABLE program of the qualified beneficiary.”
Conforming amendment— Section 529A(b)(2)(B) of such Code is amended by inserting “paragraph (8) or” after “Except in the case of contributions under” in the matter preceding clause (i).
Delay of suspension of benefits— Section 103(b)(1) of the Stephen Beck, Jr., ABLE Act of 2014 is amended by inserting “, and the suspension shall begin with the benefits payable for the 1st calendar month that begins after the 2-month period that begins with the date the individual receives notice from the Commissioner of Social Security that the benefits are to be so suspended” before the period.
Educational materials— The Commissioner of Social Security shall develop and offer materials to educate individuals who become eligible for benefits under the supplemental security income program under title XVI of the Social Security Act about ABLE accounts (within the meaning of section 529A of the Internal Revenue Code of 1986), and shall report to the Congress on the availability of the materials on a State-by-State basis.
Sec. 3 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.
Sec. 4 Directing agencies to inform people with disabilities about ABLE accounts
Social Security Administration—
In general— Beginning 180 days after the date of enactment of this Act, the Commissioner of Social Security shall provide the information described in paragraph (3) to any individual who is receiving any of the following on or after such date:
A supplemental security income benefit under title XVI of the Social Security Act (42 U.S.C. 1381 et seq.).
A disability insurance benefit under section 223 of the Social Security Act (42 U.S.C. 423).
A monthly insurance benefit under section 202 of the Social Security Act (42 U.S.C. 402) based on such individual's disability (as defined in section 223(d) of such Act (42 U.S.C. 423(d))).
Provision of information upon redetermination or overpayment— Beginning 180 days after the date of enactment of this Act, the Commissioner of Social Security shall, in addition to providing the information described in paragraph (3) in accordance with paragraph (1), provide such information to any individual receiving a benefit described in paragraph (1)—
whenever such individual's eligibility for such benefit is redetermined; and
whenever such individual is found to have received an overpayment of such benefits due to the individual having resources that exceed the amount established under subparagraph (A) or (B) of section 1611(a)(3) of the Social Security Act (42 U.S.C. 1382(a)(3)), as applicable to the individual.
Information on ABLE accounts— The information described in this paragraph is the following:
Information on the existence of—
qualified ABLE programs as defined in section 529A of the Internal Revenue Code of 1986; and
accessible resources for people with disabilities such as the National Association of State Treasurers, which includes ABLE Today, and the National Disability Institute, which includes the ABLE National Resource Center.
Instructions on how to open an ABLE account (as defined in section 529A of the Internal Revenue Code of 1986).
Department of Veterans Affairs—
In general— Chapter 63 of title 38, United States Code, is amended by adding at the end the following new section:
“6321. ABLE programs
“The Secretary shall inform each individual who enrolls in a program carried out under the laws administered by the Secretary about the existence of qualified ABLE programs (as defined in section 529A of the Internal Revenue Code of 1986) and resources for people with disabilities, such as the National Association of State Treasurers, which includes ABLE Today, and National Disability Institute, which includes the ABLE National Resource Center, at the time of such enrollment.”
Clerical amendment— The table of sections at the beginning of chapter 63 of such title is amended by adding at the end the following new item: