[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2459 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 2459
To amend the Internal Revenue Code to allow employers to contribute to
ABLE accounts in lieu of retirement plan contributions.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 24, 2025
Ms. Klobuchar (for herself, Mr. Schmitt, Mr. Van Hollen, and Mr. Moran)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code to allow employers to contribute to
ABLE accounts in lieu of retirement plan contributions.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``ABLE Employment Flexibility Act''.
SEC. 2. PROTECTING WORKING ABLE INDIVIDUALS FROM LOSING BENEFITS
BECAUSE OF RETIREMENT PLAN RULES.
(a) In General.--Section 414 of the Internal Revenue Code of 1986
is amended by adding at the end the following new subsection:
``(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.
``(2) Treatment of contributions.--
``(A) No deduction for amounts contributed to able
account.--Except as provided in subparagraph (B), a
contribution to a qualified ABLE program pursuant to an
election under paragraph (1) shall not be treated as a
contribution to an applicable employer plan.
``(B) 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 an election under paragraph (1) shall be treated as
if such contributions were made to the plan.
``(3) Universal availability.--Paragraph (1) shall not
apply unless the plan provides that the election described
therein is available to all eligible ABLE individuals who are
eligible to participate in the plan.
``(4) Cash or deferred arrangement.--A plan shall not fail
to be treated as including a qualified cash or deferred
arrangement described in section 401(k)(1) solely because such
plan provides for the election described in paragraph (1).
``(5) 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.
``(6) Treatment of permissive withdrawals.--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.''.
(b) Treatment as Beneficiary Contribution.--Section 529A(b)(7) of
the Internal Revenue Code of 1986 is amended by redesignating
subparagraph (B) as 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.''.
(c) Clarification of Availability of Employer Contributions.--
Section 529A(e) of the Internal Revenue Code of 1986 is amended by
adding at the end the following new paragraph:
``(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.''.
(d) Deduction for Contributions Remitted by Employer to a Qualified
ABLE Program.--Not later than 1 year after the date of the enactment of
this Act, 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; and
(2) update the publications issued for employers to
encourage employers offering a retirement plan with automatic
enrollment to notify employees who elect not to contribute to
the plan and who may be eligible to contribute to a qualified
ABLE program to notify such employees of the possibility of a
contribution under section 529A(b)(2)(B)(ii) of such Code.
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan and taxable
years beginning after the date of the enactment of this Act.
(2) Clarifications.--The amendment made by subsection (c)
and the amendments made pursuant to subsection (d)(1) shall
apply to plan and taxable years beginning before, on, or after
the date of the enactment of this Act.
(f) Model Amendment Authority.--The Secretary of the Treasury (or
such Secretary's delegate) shall promulgate model amendments which
plans may adopt to implement contributions to qualified ABLE programs
pursuant to the amendments made by this section.
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