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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2585 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2585

  To amend the Internal Revenue Code of 1986 to permit military death 
     gratuities to be contributed to certain tax-favored accounts.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 6, 2006

 Mr. Smith (for himself and Mr. Kerry) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
  To amend the Internal Revenue Code of 1986 to permit military death 
     gratuities to be contributed to certain tax-favored accounts.

    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 ``Fallen Heroes Family Savings Act''.

SEC. 2. CONTRIBUTIONS OF MILITARY DEATH GRATUITIES TO CERTAIN TAX-
              FAVORED ACCOUNTS.

    (a) Roth IRAs.--Subsection (e) of section 408A of the Internal 
Revenue Code of 1986 (relating to qualified rollover contribution) is 
amended to read as follows:
    ``(e) Qualified Rollover Contribution.--For purposes of this 
section--
            ``(1) In general.--The term `qualified rollover 
        contribution' means a rollover contribution to a Roth IRA from 
        another such account, or from an individual retirement plan, 
        but only if such rollover contribution meets the requirements 
        of section 408(d)(3). Such term includes a rollover 
        contribution described in section 402A(c)(3)(A). For purposes 
        of section 408(d)(3)(B), there shall be disregarded any 
        qualified rollover contribution from an individual retirement 
        plan (other than a Roth IRA) to a Roth IRA.
            ``(2) Military death gratuity.--
                    ``(A) In general.--The term `qualified rollover 
                contribution' includes a contribution to a Roth IRA 
                maintained for the benefit of an individual to the 
                extent that such contribution does not exceed the 
                amount received by such individual under section 1477 
                of title 10, United States Code, or under section 1967 
                of title 38 of such Code, if such contribution is made 
                not later than 1 year after the day on which such 
                individual receives such amount.
                    ``(B) Annual limit on number of rollovers not to 
                apply.--Section 408(d)(3)(B) shall not apply with 
                respect to amounts treated as a rollover by the 
                subparagraph (A).
                    ``(C) Application of section 72.--For purposes of 
                applying section 72 in the case of a distribution which 
                is not a qualified distribution, the amount treated as 
                a rollover by the subparagraph (A) shall be treated as 
                investment in the contract.''.
    (b) Health Savings Accounts and Archer MSAs.--Sections 220(f)(5) 
and 223(f)(5) of such Code are both amended by adding at the end the 
following flush sentence: ``For purposes of subparagraphs (A) and (B), 
rules similar to the rules of section 408A(e)(2) (relating to rollover 
treatment for contributions of military death gratuity) shall apply.''.
    (c) Education Savings Accounts.--Section 530(d)(5) of such Code is 
amended by adding at the end the following new sentence: ``For purposes 
of this paragraph, rules similar to the rules of section 408A(e)(2) 
(relating to rollover treatment for contributions of military death 
gratuity) shall apply.''.
    (d) Effective Dates.--
            (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply with respect to 
        deaths from injuries occurring on or after the date of the 
        enactment of this Act.
            (2) Application of amendments to deaths from injuries 
        occurring on or after october 7, 2001, and before enactment.--
        The amendments made by this section shall apply to any 
        contribution made pursuant to section 408A(e)(2), 220(f)(5), 
        223(f)(5), or 530(d)(5) of the Internal Revenue Code of 1986, 
        as amended by this Act, with respect to amounts received under 
        section 1477 of title 10, United States Code, or under section 
        1967 of title 38 of such Code, for deaths from injuries 
        occurring on or after October 7, 2001, and before the date of 
        the enactment of this Act if such contribution is made not 
        later than 1 year after the date of the enactment of this Act.
                                 <all>
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