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104TH CONGRESS

2D SESSION H. R. 3104

To amend the Internal Revenue Code of 1986 to provide special rules relating

to veterans’ reemployment rights under the Uniformed Services Employment and Reemployment Rights Act of 1994.

IN THE HOUSE OF REPRESENTATIVES

MARCH 18, 1996

Mrs. VUCANOVICH introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

special rules relating to veterans’ reemployment rights

under the Uniformed Services Employment and Reemployment Rights Act of 1994.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. TREATMENT OF CERTAIN VETERANS’ REEM4 PLOYMENT RIGHTS.

5 (a) IN GENERAL.—Section 414 of the Internal Reve6 nue Code of 1986 is amended by adding at the end the

7 following new subsection:
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1 ‘‘(u) SPECIAL RULES RELATING TO VETERANS’ RE2 EMPLOYMENT RIGHTS UNDER USERRA.—

3 ‘‘(1) TREATMENT OF CERTAIN CONTRIBUTIONS

4 MADE PURSUANT TO VETERANS’ REEMPLOYMENT

5 RIGHTS.—If any contribution is made by an em6 ployer or an employee under an individual account

7 plan with respect to an employee, or by an employee

8 to a defined benefit plan that provides for employee

9 contributions, and such contribution is required by

10 reason of such employee’s rights under chapter 43 of

11 title 38, United States Code, resulting from qualified

12 military service, then—

13 ‘‘(A) such contribution shall not be subject

14 to any otherwise applicable limitation contained

15 in section 402(g), 402(h), 403(b), 404(a),

16 404(h), 408, 415, or 457, and shall not be

17 taken into account in applying such limitations

18 to other contributions or benefits under such

19 plan or any other plan, with respect to the year

20 in which the contribution is made,

21 ‘‘(B) such contribution shall be subject to

22 the limitations referred to in subparagraph (A)

23 with respect to the year to which the contribu24 tion relates (in accordance with rules prescribed

25 by the Secretary), and
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1 ‘‘(C) such plan shall not be treated as fail2 ing to meet the requirements of section

3 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11),

4 401(m), 403(b)(12), 408(k)(3), 408(k)(6),

5 410(b), or 416 by reason of the making of (or

6 the right to make) such contribution.

7 For purposes of the preceding sentence, any elective

8 deferral or employee contribution made under para9 graph (2) shall be treated as required by reason of

10 the employee’s rights under such chapter 43.

11 ‘‘(2) REEMPLOYMENT RIGHTS UNDER USERRA

12 WITH RESPECT TO ELECTIVE DEFERRALS.—

13 ‘‘(A) IN GENERAL.—For purposes of this

14 subchapter and section 457, if an employee is

15 entitled to the benefits of chapter 43 of title 38,

16 United States Code, with respect to any plan

17 which provides for elective deferrals, the em18 ployer sponsoring the plan shall be treated as

19 meeting the requirements of such chapter 43

20 with respect to such elective deferrals only if

21 such employer—

22 ‘‘(i) permits such employee to make

23 additional elective deferrals under such

24 plan (in the amount determined under sub25 paragraph (B) or such lesser amount as is
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1 elected by the employee) during the period

2 which begins on the date of the reemploy3 ment of such employee with such employer

4 and has the same length as the lesser of—

5 ‘‘(I) the product of 3 and the pe6 riod of qualified military service which

7 resulted in such rights, and

8 ‘‘(II) 5 years, and

9 ‘‘(ii) makes a matching contribution

10 with respect to any additional elective de11 ferral made pursuant to clause (i) which

12 would have been required had such defer13 ral actually been made during the period of

14 such qualified military service.

15 ‘‘(B) AMOUNT OF MAKEUP REQUIRED.—

16 The amount determined under this subpara17 graph with respect to any plan is the maximum

18 amount of the elective deferrals that the indi19 vidual would have been permitted to make

20 under the plan in accordance with the limita21 tions referred to in paragraph (1)(A) during the

22 period of qualified military service if the indi23 vidual had continued to be employed by the em24 ployer during such period and received com25 pensation as determined under paragraph (7).
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1 Proper adjustment shall be made to the amount

2 determined under the preceding sentence for

3 any elective deferrals actually made during the

4 period of such qualified military service.

5 ‘‘(C) ELECTIVE DEFERRAL.—For purposes

6 of this paragraph, the term ‘elective deferral’

7 has the meaning given such term by section

8 402(g)(3); except that such term shall include

9 any deferral of compensation under an eligible

10 deferred compensation plan (as defined in sec11 tion 457(b)).

12 ‘‘(D) AFTER-TAX EMPLOYEE CONTRIBU13 TIONS.—References in subparagraphs (A) and

14 (B) to elective deferrals shall be treated as in15 cluding references to employee contributions.

16 ‘‘(3) CERTAIN RETROACTIVE ADJUSTMENTS

17 NOT REQUIRED.—For purposes of this subchapter

18 and subchapter E, no provision of chapter 43 of title

19 38, United States Code, shall be construed as re20 quiring—

21 ‘‘(A) any crediting of earnings to an em22 ployee with respect to any contribution before

23 such contribution is actually made, or
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1 ‘‘(B) any allocation of any forfeiture with

2 respect to the period of qualified military serv3 ice.

4 ‘‘(4) LOAN REPAYMENT SUSPENSIONS PER5 MITTED.—If any plan suspends the obligation to

6 repay any loan made to an employee from such plan

7 for any part of any period during which such em8 ployee is performing service in the uniformed serv9 ices (as defined in chapter 43 of title 38, United

10 States Code), whether or not qualified military serv11 ice, such suspension shall not be taken into account

12 for purposes of section 72(p), 401(a), or 4975(d)(1).

13 ‘‘(5) QUALIFIED MILITARY SERVICE.—For pur14 poses of this subsection, the term ‘qualified military

15 service’ means any service in the uniformed services

16 (as defined in chapter 43 of title 38, United States

17 Code) by any individual if such individual is entitled

18 to reemployment rights under such chapter with re19 spect to such service.

20 ‘‘(6) INDIVIDUAL ACCOUNT PLAN.—For pur21 poses of this subsection, the term ‘individual account

22 plan’ means any defined contribution plan (including

23 any tax-sheltered annuity plan under section 403(b),

24 any simplified employee pension under section
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1 408(k), and any eligible deferred compensation plan

2 (as defined in section 457(b)).

3 ‘‘(7) COMPENSATION.—For purposes of sections

4 403(b)(3), 415(c)(3), and 457(e)(5), an employee

5 who is in qualified military service shall be treated

6 as receiving compensation from the employer during

7 such period of qualified military service equal to—

8 ‘‘(A) the compensation the employee would

9 have received during such period if the em10 ployee were not in qualified military service, de11 termined based on the rate of pay the employee

12 would have received from the employer but for

13 absence during the period of qualified military

14 service, or

15 ‘‘(B) if the compensation the employee

16 would have received during such period was not

17 reasonably certain, the employee’s average com18 pensation from the employer during the 12-

19 month period immediately preceding the quali20 fied military service (or, if shorter, the period of

21 employment immediately preceding the qualified

22 military service).

23 ‘‘(8) USERRA REQUIREMENTS FOR QUALIFIED

24 RETIREMENT PLANS.—For purposes of this sub25 chapter and section 457, an employer sponsoring a
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1 retirement plan shall be treated as meeting the re2 quirements of chapter 43 of title 38, United States

3 Code, only if each of the following requirements is

4 met:

5 ‘‘(A) An individual reemployed under such

6 chapter is treated with respect to such plan as

7 not having incurred a break in service with the

8 employer maintaining the plan by reason of

9 such individual’s period of qualified military

10 service.

11 ‘‘(B) Each period of qualified military

12 service served by an individual is, upon reem13 ployment under such chapter, deemed with re14 spect to such plan to constitute service with the

15 employer maintaining the plan for the purpose

16 of determining the nonforfeitability of the indi17 vidual’s accrued benefits under such plan and

18 for the purpose of determining the accrual of

19 benefits under such plan.

20 ‘‘(C) An individual reemployed under such

21 chapter is entitled to accrued benefits that are

22 contingent on the making of, or derived from,

23 employee contributions or elective deferrals only

24 to the extent the individual makes payment to

25 the plan with respect to such contributions or
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1 deferrals. No such payment may exceed the

2 amount the individual would have been per3 mitted or required to contribute had the indi4 vidual remained continuously employed by the

5 employer throughout the period of qualified

6 military service. Any payment to such plan shall

7 be made during the period beginning with the

8 date of reemployment and whose duration is 3

9 times the period of the qualified military service

10 (but not greater than 5 years).

11 ‘‘(9) PLANS NOT SUBJECT TO TITLE 38.—This

12 subsection shall not apply to any retirement plan to

13 which chapter 43 of title 38, United States Code,

14 does not apply.

15 ‘‘(10) REFERENCES.—For purposes of this sec16 tion, any reference to chapter 43 of title 38, United

17 States Code, shall be treated as a reference to such

18 chapter as in effect on December 12, 1994 (without

19 regard to any subsequent amendment).’’

20 (b) EFFECTIVE DATE.—The amendment made by

21 this section shall be effective as of December 12, 1994.

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