New legislation would allow employers to make tax-free contributions to ABLE accounts for the disabled instead of to traditional 401(k) accounts.
The bill, ABLE Employment Flexibility Act, introduced Wednesday by Reps. Sharice Davids, D-Kansas, and Brian Fitzpatrick, R-Pennsylvania, is "designed to help workers with disabilities build financial security without risking essential federal benefits," Davids said in a statement.
ABLE accounts — special savings accounts for people with disabilities — allow individuals to save money without affecting their eligibility for federal assistance programs.
“Workers with disabilities should have the same access to employer benefits as anyone else, including the ability to save for their future,” Davids said.
The ABLE Employment Flexibility Act "aligns our benefits system with the modern workforce, expanding opportunity and reaffirming a basic truth: financial independence should be within reach for every American,” Fitzpatrick added.
As it stands now, many employers offer 401(k) matching contributions as a benefit of employment.
"However, workers with disabilities are often excluded from taking advantage of this option due to strict federal asset limits tied to programs like Supplemental Security Income (SSI)," Davids said.
"Contributions to retirement accounts can unintentionally disqualify individuals from these benefits, leaving workers with disabilities at a financial disadvantage compared to their peers," she added.
Under SSI, the Social Security Administration "uses countable resources to determine eligibility," a spokesperson for Davids' office told ThinkAdvisor on Thursday in an email.
"The limits on these resources are $2,000 for an individual and $3,000 for a married couple. SSA excludes several things from being countable resources, including household goods, your home and land, one vehicle, certain burial plots, etc.; this also includes up to $100,000 in ABLE accounts," the spokesperson said.
"Traditional retirement accounts (alongside standard cash, checking, and savings assets) are considered countable resources by the SSA," added the spokesperson.
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