How HR 4644 changes current law

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

The bill allows employers to contribute to ABLE accounts instead of retirement plan contributions, providing new options for employees while protecting their eligibility for certain federal benefits.

• Section 414

  (dd) ABLE Account Contributions.-- (1) In general.--An applicable employer plan (as defined in subsection (v)(6)(A)) which 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 which 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.

  This introduces the ability for employers to contribute to ABLE accounts for eligible employees.

• Section 529A(b)(7)

  subparagraph (B) → subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: (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(dd) shall be treated as made by the designated beneficiary.

  This change clarifies that employer contributions to ABLE accounts will be treated as made by the employee beneficiary.

• Section 529A(e)

  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.

  Employers are explicitly permitted to make contributions to ABLE programs on behalf of employees.

• Section 162

  the Secretary of the Treasury shall-- (1) amend the regulations under section 162 of the Internal Revenue Code of 1986 to confirm that contributions made by an employer to a qualified ABLE program described in section 529A of such Code on behalf of an eligible ABLE individual described in section 414(dd)(5) of such Code who is an employee of 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 with respect to such individual;

  Employers' contributions to ABLE accounts will be recognized as reasonable compensation, encouraging employer participation.

• Section 414

  An eligible ABLE individual may direct amounts eligible for withdrawal from an eligible contribution arrangement pursuant to section 414(w) to be contributed to a qualified ABLE program described in section 529A on behalf of such eligible ABLE individual.

  Eligible ABLE individuals can transfer certain funds directly into their ABLE accounts.

• Section 414(dd)

  Notwithstanding any other provision of Federal law that requires consideration of one or more financial circumstances (including income) of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such provision to be provided to or for the benefit of such individual, a contribution to a qualified ABLE program pursuant to paragraph (1) or (6) of section 414(dd) of the Internal Revenue Code of 1986 shall be disregarded (including disregarded as income) for such purpose with respect to any period during which such individual maintains, makes contributions to, or receives distributions from such ABLE program.

  Contributions to ABLE accounts made under this new provision will not count against eligibility for federal assistance programs.