LEO Fair Retirement Act of 2017

Summary: LEO Fair Retirement Act of 2017 This bill provides that for purposes of computing the annuity of a federal law enforcement officer (LEO) under the Civil Service Retirement System and the Federal Employees Retirement System, any premium pay earned by such LEO in excess of limitations imposed on such pay shall be included in the LEO's average pay, contingent on the payment of a specified lump sum by the LEO to the Office of Personnel Management.  The bill makes postal inspectors eligible for availability pay (i.e., premium pay paid to LEOs who are criminal investigators). The bill allows a nonrefundable tax credit for certain lump-sum payments of uncompensated law enforcement premium pay.

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``LEO Fair 
Retirement Act of 2017''.
    (b) Findings.--Congress finds the following:
            (1) Federal law enforcement officers are never ``off-
        duty''. They are counted on to respond at any time of the day 
        or night, regardless of their official duty status, to protect 
        the public safety. Outside of our Nation's armed forces, theirs 
        is the only profession comprised of individuals who are 
        routinely called upon to put their lives on the line to keep 
        America safe.
            (2) Though the Federal Government may house the largest 
        variety of occupations of any U.S. employer across its panoply 
        of agencies and entities, Federal law enforcement is absolutely 
        unique among them, and the Federal law enforcement officer has 
        no counterpart in the private sector. It is one of the most 
        stressful, most dangerous, and most rewarding careers for those 
        who meet the rigorous requirements of the job.
            (3) It was in recognition of the unique nature of the 
        occupation, and the demanding schedules required of those who 
        fill its ranks, that Congress established distinct pay and 
        benefit systems for Federal law enforcement positions. This 
        includes basic pay, retirement, and even overtime compensation.
            (4) Under current law, however, the payment of overtime 
        compensation is limited, and is only payable to the extent that 
        the payments do not cause the aggregate of the law enforcement 
        officer's biweekly or annual pay to exceed the pay caps 
        established under section 5547 of title 5, United States Code. 
        This often results in a law enforcement officer working 
        significant amounts of overtime hours year after year for which 
        the officer is never compensated.
            (5) In light of the continuing homeland and national 
        security threats facing our Nation, it is in the interest of 
        the Federal Government to ensure that it can continue to 
        recruit and retain the highest caliber personnel by allowing 
        Federal law enforcement officers the opportunity to reclaim 
        full credit in retirement for overtime hours worked but never 
        paid.

SEC. 2. COMPUTATION OF ANNUITY FOR HOURS WORKED IN EXCESS OF LAW 
              ENFORCEMENT PREMIUM PAY LIMITATIONS.

    (a) CSRS.--
            (1) In general.--Section 8339 of title 5, United States 
        Code, is amended by adding at the end the following:
    ``(v)(1) Notwithstanding any other provision of this title, 
including sections 5545a and 5547, and consistent with the requirements 
of paragraph (2), any premium pay described in section 5547(a) that 
would have been received by a law enforcement officer but for the 
limitation provided in such section shall be included in the average 
pay of such officer for purposes of computing the annuity of such 
officer under this section.
    ``(2)(A) Paragraph (1) shall not apply unless the law enforcement 
officer makes a lump-sum payment to the Office in the manner prescribed 
under this paragraph.
    ``(B) The officer may--
            ``(i) not later than 180 days before the date that the 
        officer's annuity will commence, request from the Office an 
        estimate (expressed as a dollar figure) of--
                    ``(I) the lump-sum payment described under 
                subparagraph (C);
                    ``(II) the amount of the officer's monthly annuity 
                payment if the officer elects to make the lump-sum 
                payment and receive an amended annuity that includes 
                the application of paragraph (1); and
                    ``(III) the amount of such officer's monthly 
                annuity payment if the officer does not make such an 
                election; and
            ``(ii) consistent with the requirements of subparagraph 
        (D), not later than 90 days after receipt of the estimate under 
        clause (i), irrevocably elect to make the lump-sum payment to 
        the Office.
    ``(C) If a law enforcement officer makes an election pursuant to 
subparagraph (B)(ii), such officer shall make a lump-sum payment to the 
Office equal to the difference between--
            ``(i) the amount that would have been contributed by the 
        officer and the employer under section 8334 during the 3 
        consecutive years used to determine average pay (as described 
        under section 8331(4)) if the rate of basic pay of the officer 
        during such period of years included any premium pay described 
        in section 5547(a) that would have been received by a law 
        enforcement officer but for the limitation provided in such 
        section; and
            ``(ii) the amount that was so contributed during such 
        period of years.
    ``(D) The officer may elect an actuarial annuity reduction, 
consistent with regulations prescribed by the Office, in lieu of the 
lump-sum payment required under subparagraphs (B) and (C).
    ``(3) In this subsection, the term `law enforcement officer' has 
the meaning given the term `qualified public safety employee' in 
section 72(t)(10) of the Internal Revenue Code of 1986.''.
            (2) Clarification with respect to annuity limit.--The 
        limitation provided in section 8339(f) of title 5, United 
        States Code, shall apply to any annuity calculated pursuant to 
        subsection (v) of such section (as added by paragraph (1)).
    (b) FERS.--Section 8415 of title 5, United States Code, is amended 
by adding at the end the following:
    ``(o)(1) Notwithstanding any other provision of this title, 
including sections 5545a and 5547, and consistent with the requirements 
of paragraph (2), any premium pay described in section 5547(a) that 
would have been received by a law enforcement officer but for the 
limitation provided in such section shall be included in the average 
pay of such officer for purposes of computing the annuity of such 
officer under this section.
    ``(2) Paragraph (1) shall not apply unless the law enforcement 
officer makes a lump-sum payment to the Office in the same manner as 
prescribed under section 8339(v)(2).
    ``(3) In this subsection, the term `law enforcement officer' has 
the meaning given the term `qualified public safety employee' in 
section 72(t)(10) of the Internal Revenue Code of 1986.''.
    (c) Application.--The amendments made by subsection (a) and (b) 
shall apply to any applicable annuity calculated on or after the date 
that is one year after the date of enactment of this Act.
    (d) Regulations.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Director of the Office of Personnel 
        Management shall promulgate regulations to carry out sections 
        8339(v) and 8415(o) of title 5, United States Code, as added by 
        subsections (a) and (b).
            (2) Lump-sum payment.--Such regulations shall include--
                    (A) procedures under which any law enforcement 
                officer covered by such sections may make the lump-sum 
                payment as described under sections 8339(v)(2) and 
                8415(o)(2) of title 5, United States Code, as added by 
                subsections (a) and (b), from amounts within the 
                officer's Thrift Savings Fund account; and
                    (B) procedures, promulgated in consultation with 
                the Thrift Savings Board, under which a transfer may be 
                made from such account to the Office of Personnel 
                Management.
            (3) Solicitation of payroll information.--Such regulations 
        shall include--
                    (A) guidance for agencies employing law enforcement 
                officers for proper retention of payroll information 
                required to carry out the amendments made by subsection 
                (a) and (b), including, for each creditable year of 
                service, the difference between the amount the law 
                enforcement officer received in gross compensation and 
                the amount that would have been received as gross 
                compensation but for the application of the premium pay 
                caps in section 5547 of title 5, United States Code; 
                and
                    (B) procedures for the Director to solicit 
                sufficient payroll information from the head of each 
                applicable agency to provide for the computations 
                required by the amendments made by this Act.

SEC. 3. ELIGIBILITY FOR AVAILABILITY PAY FOR POSTAL INSPECTORS.

    (a) In General.--Section 5545a of title 5, United States Code, is 
amended by adding at the end the following:
    ``(l) The provisions of subsections (a)-(h) providing for 
availability pay shall apply to a Postal Inspector. For the purpose of 
this section, section 5542(d) of this title, and section 13(a)(16) and 
(b)(30) of the Fair Labor Standards Act of 1938 (29 U.S.C. 213(a)(16) 
and (b)(30)), a Postal Inspector shall be deemed to be a criminal 
investigator as defined in this section. For purposes of this 
subsection, the term `Postal Inspector' has the meaning given such term 
under section 1003(c) of title 39.''.
    (b) Conforming Amendment.--Section 410(b)(11) of title 39, United 
States Code, is amended by striking ``Section 5520a'' and inserting 
``Sections 5520a and 5545a''.

SEC. 4. CREDIT FOR CERTAIN LUMP-SUM PAYMENTS OF UNCOMPENSATED LAW 
              ENFORCEMENT PREMIUM PAY.

    (a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by chapter 1 of the 
Internal Revenue Code of 1986 for the taxable year an amount equal to 
the sum of the lump-sum payments made by the individual during such 
taxable year pursuant to section 8339(v)(2) or 8415(o)(2) of title 5, 
United States Code, with respect to an annuity of such individual.
    (b) Treated as Non-Refundable Personal Credit.--For purposes of the 
Internal Revenue Code of 1986, the credit allowed under subsection (a) 
shall be treated as a credit allowed under subpart A of part IV of 
subchapter A of chapter 1 of such Code.