Republican State Sanctioned Discrimination for Disabled Workers Who Want to Save for Retirement
AKA The ABLE Employment Flexibility Act of 2024
🤯 Cheryl.wTf 🍴 | 🔔 Subscribe | | 📖 Shop Books | 👕 Shop Merch
The ABLE Employment Flexibility Act of 2024 sounds like one of those feel-good bills politicians love to trot out at press conferences —smiling, nodding, and congratulating themselves for “fixing the system.” On paper, it lets employers contribute to ABLE accounts instead of traditional retirement plans like 401(k)s for disabled workers.
But let’s be clear: this bill is not fixing anything. If you peel back the shiny marketing language, you’ll find a disappointing mix of financial discrimination, poverty perpetuation, and a sprinkle of condescension for disabled workers just trying to live their lives.
Let’s break it down: What this bill actually does, what it doesn’t do, and how it keeps disabled people chasing an economic carrot they’re not allowed to eat.
What the ABLE Employment Flexibility Act Does
Employer Contributions to ABLE Accounts:
Due to strict limits on asset resources for most government aid programs, working disabled individuals generally must opt out of the benefit of Employer contributions to retirement plans such as 401(k)s. This bill generously lets employers contribute to ABLE accounts instead of retirement plans like 401(k)s.
Translation: You get crumbs instead of bread, but look—they’re gluten-free!LEARN MORE HERE: ABLE accounts are designed for people with disabilities to save money tax-free without jeopardizing benefits like Medicaid and Supplemental Security Income (SSI).
Non-Discrimination Rules:
Contributions are treated as if they were made to a retirement plan for tax and compliance purposes. Employers can contribute, but only if you qualify for ABLE - which most people with a disability who are still capable of working, do not.Reality Check: This sounds equitable until you realize the contribution rules are different for the disabled than for the able-bodied. More on that circus act below.
Annual Contribution Limits:
The bill caps contributions at $18,000 per year (2024). For comparison, able-bodied workers under 50 can squirrel away $23,000 in a 401(k).
The Message: “Disabled workers, you can save for the future… just not too much. Stay in your lane!”
And, they could raise the 401(k) and Roth IRA limits in the future - but that won’t raise the ABLE Account limits because that’s entirely different legislation. So watch that gap widen over time.
While this flexibility sounds helpful, it comes with significant trade-offs that disadvantages and discriminates against disabled workers.
The Hidden Downsides
No Retirement Savings for the Future
Here’s the thing: ABLE accounts are not retirement accounts. They’re savings accounts for living expenses. There’s no penalty for early withdrawals, which sounds nice until you realize there’s no incentive to leave the money alone for future security.
For example: Mark, a disabled worker, uses his ABLE account to save $10,000 for emergencies. A medical bill hits—because of course it does—and suddenly, Mark has no savings and no retirement.
Meanwhile, able-bodied John has a 401(k) that will incur penalties for early withdraw that will earn compound interest until he retires to Florida at age 65 AND a regular savings account that he can use for anything he wants.
Question: Couldn’t we just eliminate retirement savings from benefit eligibility rules for everyone? Oh right… that would make too much sense.
Those in favor of this law will argue that the lack of a withdrawl pentaly gives disabled folks more flexibility. You’re right, it does. It also requires that they keep far more detailed records if they are trying to save for retirement because the funds are not segregated in any way. And let’s face it, the average American has received zero financial training in public schools and has no idea what they’re doing to begin with. Add in a disability that impacts your ability to think and reason? What hope do you have?
Limited Use for "Qualified" Expenses
While John has to wait until retirement age to withdraw his retirement savings, once he hits that magical number, he is free to live the golden years of his dreams without government restriction or interference. And if he doesn't spend it all? Jackpot! He's leaving a legacy inheritance for his entitled brat children to squabble over.
Mark, however, can only use his hard earned "retirement" mixed with other savings for "qualifying purchases" whatever the powers that be decide that means. Vacation? Nope. A nice gift for his favorite daughter? No way. Freedom? Not if your disabled. A bureaucratic bean counter will be looking over your shoulder, your entire life, even in retirement, telling you what you can and can't spend your hard earned savings on. And if you die before you run out of money? Uncle Sam will swoop in and gobble it up under a post-mortem bill for medical services rendered. Good luck to your children on verifying the accuracy of that bill.
Contribution Limits: Discrimination with a Smile
Here’s where the bill goes from disappointing to downright insulting:
$18,000 annual deposit cap: This includes contributions from you, your family, grants, non-profits, and now, your employer. A 401(k) lets able-bodied workers save $23,000, plus unlimited amounts in standard savings accounts, investment accounts, bitcoin, or whatever NFT like tech-bro investment vehicle appears next. Disabled workers get one account, with a smaller cap that applies to all contributions, not just retirement, which means they could have for-go some of that generous employer matching anyway. And this is despite the fact that their cost of living is 28% higher than able-bodied workers.
$100,000 SSI Limit: If your ABLE account balance crosses $100,000, your Supplemental Security Income (SSI) benefits are suspended. Not reduced. Suspended. Who can retire on $100,000? Seriously. I don’t know about you, but that might get me through 3 years at today’s prices because I still have a mortgage and high property taxes, if I’m really careful. My electric bill is twice what was 3 years ago, how far will that $100,000 get me in 10 years? NOTE: That $100k is a hard limit. It takes an act of legislation to raise it.
Total balance limit of $235,000 to $550,000: depending on the state, your account has a lifetime total balance limit and you're only allowed to own a single account. Do you know how much my financial advisor tells me I need to retire? Hint: It’s a hell of a lot more than that.
The Math: If you were spending at the federal poverty level of $14,480 per year - who can pay rent with that? - you better hope you're dead in 16 years or less. And let's face it, the working disabled are more likely to be unable to continue working at a younger age than an able-bodied worker.
Example Time: Mark sells his house to downsize after inheriting it from his parents (RIP, Mom and Dad) whom he’s always lived with and were his primary support for accomodating his health needs. He parks the meager proceeds in his ABLE account to help him pay for unexpected expenses since he no longer has Mom and Dad to help him out, a measly $15,000. Then his employer contributes $3,500 in retirement benefits 2 days later, and BAM—He’s exceeded his annual cap and the SSI limit by $500. SSI is suspended. His water bill, which is due in 5 days and would put him back under the limit. Timing was bad. How many weeks, how many phone calls, how many hours on hold, how many sheets of paper will it take for Mark to get his SSI reinstated? How many late fees, interest, and penalties will wrack up while he’s not receiving those checks?
This bill blatantly discriminates against disabled workers limiting their retirement savings more severely than their able-bodied co-workers, punishes individuals for saving money, discourages smart financial decisions and artificially restricts the freedoms of individuals by discriminating against those with disabilities.
Investment Risks Without Retirement Protections
ABLE accounts allow investing in the stock market. Great! Because who wouldn’t want to roll the dice with their rent money?
401(k)s offer:
Employer matching.
Financial advisors.
Growth-focused investments built for the long haul.
Early withdraw penalties to encourage saving for the future
Segregated funds specifically for retirement savings
Protection from short-term market volatility because of the long-term savings goal
ABLE accounts offer:
Optional investments in some (not all) mutual and index funds.
Some optional professional financial advising, for a fee.
Co-mingled short-term and long-term savings with no easy way to segrate or track funds.
Immediate exposure of short-term savings to market volatility.
Potential restricted access to short-term savings because they were invested in long-term vehicles that cannot be liquidated quickly and will potentially be liquidated at a loss.
Meet Tom: Tom uses his ABLE account to save for accessible transportation expenses and retirement. Then the market dips, and suddenly he’s down 10%. Unlike able-bodied folks who shrug off temporary 401(k) losses that will balance out over decades, Tom can’t afford to lose a penny, he needs to pay his driver next week to get him to a doctor appointment.
Employer Adoption: Will They Even Do It?
Here’s a fun twist: Employers are under no obligation to shift contributions to ABLE accounts. Small businesses, especially, might skip it altogether because of the administrative hassle.
So, while lawmakers pat themselves on the back, the chances of employers actually adopting this policy? Let’s just say you shouldn’t hold your breath unless you have great healthcare coverage.
What About the Self-Employed Working Disabled?
The working disabled are more likely to be self-employed because it gives them the freedom and flexibility to better accomodate their health needs. This already puts them at a disadvantage to those employed by large companies because there is no “employer matching” to their savings.
This bill doesn’t address the self-employed at all. Can you make a pre-tax or tax-free contribution to an ABLE account for the purpose of retirement savings from your business? I don’t know.
Pat Yourself on the Back Any Harder and You'll Hurt Yourself: You Wouldn't Want to Become Disabled Would You?
“This bill removes barriers,” says Rep. Fitzpatrick (PA-1).
Spoiler Alert: It doesn’t.
Fitzpatrick claims the bill “empowers employees with disabilities to achieve financial security and thrive.”
Reality: It’s like slamming closed the lid on the top of a well while giving a one legged man at the bottom of the well a ladder with missing rungs and telling him to enjoy the climb to freedom.
Rep. Davids (KS-3) says it’s a “commonsense fix.”
Ah yes, commonsense—where disabled workers get smaller savings, more restrictions, and no path to actual retirement. Makes total sense.
"Individuals with disabilities deserve the freedom to access employee benefits and save for retirement without risking their eligibility for critical federal programs,” said Rep. Fitzpatrick (PA-1).
You're absolutely right. They do. So why doesn't this bill do that?
Fitzpatrick continued, “This is about breaking down barriers and ensuring equal opportunity for all.”
*Checks the bill again* Are we reading the same bill? I don't think “equal opportunity” means what you think it means, Brian.
“Workers with disabilities should have the same access to employer benefits as anyone else, including the ability to save for their future,” said Rep. Davids (KS-3).
Yet, “After speaking with Kansans like Rachel Mast, a person with Down syndrome." Rep Davids still went ahead and introduced this discriminatory bill, while continuing to claim that it will, "ensure that workers with disabilities can build financial security without sacrificing the federal benefits that help them succeed."
Lies. All Lies - or at best, gross over representation.
It seems this bill is also supported by, Jim Hudson, Executive Director, National Down Syndrome Congress (NDSC). For shame Mr. Hudson. Our legislators can and should do better, and you were perfectly positioned to insist that they do it, and you failed. You failed people with Down Syndrome and the broader disabled communities.
A Better Solution: Because It’s Not That Hard
If lawmakers actually wanted to level the playing field, they could:
Exclude qualified retirement accounts such as 401(k) and Roth IRAs as well as qualified college saving funds when determining eligibility for all State and Federal aid programs.
That's it. 1 item. 1 sentence. Zero $. Simple.
They could also…
Ensure that disability payments actually cover a person’s expenses (one size payment, one size income cap above that payment, does not fit all)
Offer a short-term disability (5 years) program that excludes all assets. Something designed to help people through acute crisis and give them time to heal while not requiring they spend every penny they’ve ever saved for their future and their children’s future. If the disability continues beyond those 5 years, perhaps we have a different set of rules, but not the rules we have now.
Raise existing asset limits to something more in-line with modern expenses and tie that number to a cost of living calculation that actually reflects the costs incurred by the individual - housing, medical expenses, utilties…
Remove complicated restrictions on how disabled people spend their money - money they have earned or has been gifted to them. If you want to restrict how federal funds are spent, be my guest.
Remove hard limits to the amount a person can earn above and beyond their disability payment and tie that number to something that reflects their actual cost of living.
If our friend Mark were receiving $1,100 per month for disability and $600 in SNAP benefits and is permited to earn no more than $1,500 per month above and beyond that, but his mortgage (which he took out before he became disabled) is $1,600 per month, utilities are $500 per month, car payment (which he bought before becoming disabled) was $600 per month, his expenses already far exceed his legally permitted income and we have even touched medical expenses that are not covered by Medicaid, clothing for his children, gas, or house repairs and up-keep.
Saying the Quiet Part Out Loud
What's not to love about my simple, cost effective, equitable solution?
Oh, right… Republicans (and most Democrats, if I’m being fair) don't actually want equity, they just want you to think they do.
Oops, did I say the quiet part out loud?
Want to doubt me? Want to believe the best in your elected officials? Telling yourself, ‘They just don’t understand the situation clearly.’?
Rep Fitzpatrick's own website says "People with disabilities are more than twice as likely to live in poverty as those without disabilities, yet their families often need 28 percent more income to achieve the same standard of living."
Notice the hyperlinks to trusted sources on those statistics? They came from Fitzpatrick, not me! He even did his homework on this bill.
His website continues, "Strict asset limits for federal assistance programs long prevented people with disabilities from saving for the future."
Yet, he is supporting a bill that doubles down on this systemic discrimination and ignores the facts and statistics he is obviously well informed on.
The Bottom Line: Politicians Know EXACTLY What They are Doing and Who it Hurts
The ABLE Employment Flexibility Act is a shiny box with nothing good inside. It creates two systems:
Non-disabled employees: Professional retirement plans, higher contributions, and the potential for long-term financial security.
Disabled employees: A capped, risky savings account with big brother oversight and judgement that will get them penalized for saving too much or spending it on the wrong thing.
By replacing retirement contributions with capped, short-term savings, the bill further entrenches forced lifetime poverty on disabled individuals.
To truly empower disabled workers, we need policies that address the root causes of inequality—not just offer overly complicated obstacle courses.
Until lawmakers address the systemic inequities keeping disabled people in poverty, bills like this are just flashy virtue signaling and nothing more.
If you think this bill or your politicians are good, I have some magic beans and a bridge to sell you.
Want more information? “ABLE Accounts?” Subscribe now and don’t miss a thing!
If you love my writing, get value out of it, and believe in paying people for their work, please consider a paid subscription so that I can continue to share my stories.
Just a left handed girl in a right handed world trying to figure out
“What the Fork🍴?!?” is going on ~ 🤯 Cheryl.wTf 🍴
🔔 More from me…
🪄 Magically Thriving Business | 🐐 Wicked Real Estate | 🌈 Go on a Side Quest
DISCLAIMER
Some outbound links may financially benefit me and the page through affiliate programs. The affiliate relationship doesn’t influence my opinion, and I would never endorse programs, products, or services I didn’t use, approve of or feel familiar with. So If you use it, I will get compensated — but there’s no additional cost to you.
Sources: