Overview

Title

To amend the Internal Revenue Code to allow employers to contribute to ABLE accounts in lieu of retirement plan contributions.

ELI5 AI

H.R. 10302 would let employers put money into special savings accounts for workers with disabilities instead of their retirement plans, making sure such deposits won't mess up the usual rules for saving for the future.

Summary AI

H.R. 10302 seeks to amend the Internal Revenue Code to allow employers to contribute to ABLE accounts instead of making contributions to retirement plans. This change means that employees eligible for ABLE accounts can opt for their employer's contributions to go into their ABLE accounts, which are savings accounts for individuals with disabilities. The bill ensures that these contributions won't affect the employer's compliance with certain retirement plan rules and clarifies that these employer contributions will be treated as if made by the account beneficiary. Additionally, it provides guidance on tax deductions for these contributions and aims to inform employees about their options regarding ABLE accounts.

Published

2024-12-05
Congress: 118
Session: 2
Chamber: HOUSE
Status: Introduced in House
Date: 2024-12-05
Package ID: BILLS-118hr10302ih

Keywords AI

able accounts internal revenue code amendment employer contributions disability savings tax deductions nondiscrimination testing employee benefits retirement plans treasury department guidance equity and fairness

Sources

Bill Statistics

Size

Sections:
2
Words:
1,148
Pages:
6
Sentences:
24

Language

Nouns: 314
Verbs: 99
Adjectives: 90
Adverbs: 5
Numbers: 53
Entities: 53

Complexity

Average Token Length:
4.55
Average Sentence Length:
47.83
Token Entropy:
4.89
Readability (ARI):
27.64

AnalysisAI

The proposed legislation, titled the "ABLE Employment Flexibility Act," aims to amend the Internal Revenue Code to allow employers to contribute to ABLE (Achieving a Better Life Experience) accounts instead of traditional retirement plans. ABLE accounts are savings accounts designed for disability-related expenses, offering eligible individuals a way to save without jeopardizing their access to public assistance benefits. This bill, introduced in the House of Representatives, focuses on offering more flexibility to employers and eligible employees regarding these contributions.

General Summary of the Bill

The bill's primary objective is to offer protection to individuals with ABLE accounts from losing benefits due to restrictions associated with retirement plan contributions. It proposes that employers can direct contributions to an employee's ABLE account rather than a traditional retirement plan. The legislation clarifies tax treatments, eligibility criteria, and contribution limits, and calls for updates and guidance from the Treasury Department to aid in implementing these new provisions. The amendments aim to provide ABLE account holders with greater financial flexibility, potentially enhancing their ability to save for disability-related needs.

Summary of Significant Issues

  1. Complex Language: The language of the bill, particularly in Section 2, is complex and may be difficult for the general public to understand. This complexity can lead to misunderstandings about employer contributions to ABLE accounts, affecting both employee choices and employer compliance.

  2. Equity Concerns: The bill does not clearly specify limits on employer contributions relative to salary percentages, which could result in disproportionate benefits favoring higher-salaried employees. Such an arrangement might raise questions about fairness and equity.

  3. Tax Implications: There is a lack of clarity regarding the tax implications of these contributions for both employers and employees. This ambiguity could lead to misunderstandings about tax obligations and benefits, impacting financial planning and compliance.

  4. Reporting Issues: The bill does not address how these contributions should be reported on tax documents, potentially leading to confusion during tax filing seasons.

  5. Variability in Implementation: The provision allowing model amendments by the Secretary of the Treasury could introduce variability in how the rules are implemented across different employers, creating inconsistencies and potential compliance difficulties.

  6. Nondiscrimination Testing: Clear guidelines are lacking on how nondiscrimination testing should be conducted for these contributions, which could pose challenges for employers in maintaining compliance and avoiding potential legal disputes.

Potential Impact on the Public

For the general public, this bill may represent a step forward in terms of flexibility and inclusivity for individuals with disabilities. By allowing employers to contribute to ABLE accounts, employees with disabilities may find themselves with augmented financial resources for managing disability-related expenses. However, the complexity of the bill and potential challenges in understanding and implementing its provisions may limit its effectiveness if not adequately addressed.

Impact on Specific Stakeholders

Positive Impacts:

  • Employees with Disabilities: This bill has the potential to significantly benefit employees with disabilities by increasing the financial flexibility afforded to them through additional pathways for employer contributions to ABLE accounts, thereby enhancing their ability to save.

  • Employers: The bill may offer employers new avenues to support employees with disabilities, possibly enhancing their reputation as inclusive workplaces and providing a competitive edge in attracting diverse talent.

Negative Impacts:

  • Compliance Challenges: Employers may face challenges related to the complex language and vague guidelines on contribution limits and tax implications, which could lead to compliance issues and potential legal exposure.

  • Equity Concerns: Without clear limits on contributions tied to salary levels, the proposed changes might inadvertently favor higher-income employees, raising concerns about inequities within organizations.

In conclusion, while the "ABLE Employment Flexibility Act" offers a promising mechanism for supporting individuals with disabilities in the workforce, careful consideration and clarification of its provisions will be essential in ensuring it has the intended positive impact without creating unforeseen complications.

Issues

  • The language in Section 2 is complex and may be difficult for laypersons to understand, potentially leading to misunderstandings regarding employer contributions to ABLE accounts. This could impact employees' decisions and employers' compliance (Section 2).

  • The bill does not specify limits on employer contributions relative to typical salary percentages. This could lead to disproportionate benefits for higher-salaried employees, raising concerns about equity and fairness (Section 2(1)).

  • There is a lack of clarity on the tax implications for employer contributions to ABLE accounts. This may cause misunderstandings about obligations and benefits for both employers and employees, affecting financial planning and compliance (Section 2(2)).

  • The bill fails to address how employer contributions to ABLE accounts should be reported on employee tax documents, potentially causing confusion during tax filing seasons (Section 2).

  • Model amendments by the Secretary of the Treasury could lead to variability in policy implementation across different employers, creating inconsistencies and compliance difficulties (Section 2(f)).

  • There is no clear guidance on nondiscrimination testing for contributions under these new rules, which could lead to compliance issues for employers, potentially exposing them to legal actions (Section 2(2)(B)).

Sections

Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.

1. Short title Read Opens in new tab

Summary AI

The first section provides the short title for the legislation, which can be referred to as the "ABLE Employment Flexibility Act."

2. Protecting working ABLE individuals from losing benefits because of retirement plan rules Read Opens in new tab

Summary AI

The bill section aims to protect individuals with ABLE accounts (savings accounts for disability-related expenses) from losing benefits due to retirement plan contributions. It allows employers to contribute to an employee's ABLE account instead of a retirement plan and clarifies tax treatment, eligibility, and contribution limits, with updates and guidance from the Treasury Department to help employers implement these changes.