II 

116TH CONGRESS 

2D SESSION S. 4173 

To amend the Internal Revenue Code of 1986 to provide a credit to small 

employers for covering military spouses under retirement plans. 

IN THE SENATE OF THE UNITED STATES 

JULY 2, 2020 

Ms. COLLINS (for herself and Ms. HASSAN) 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 provide 

a credit to small employers for covering military spouses 

under retirement plans. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Military Spouses Re5 tirement Security Act’’. 

6 SEC. 2. CREDIT FOR SMALL EMPLOYERS PROVIDING RE7 TIREMENT PLANS FOR MILITARY SPOUSES. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 section: 

3 ‘‘SEC. 45U. SMALL EMPLOYER PROVISION OF RETIREMENT 

4 SAVINGS FOR MILITARY SPOUSES. 

5 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

6 the case of a covered small employer, the military spouse 

7 employee retirement plan credit determined under this 

8 section for the taxable year is an amount equal to the sum 

9 of— 

10 ‘‘(1) $200 for each eligible military spouse em11 ployee who is eligible to participate in an eligible em12 ployer plan during the plan year ending with or 

13 within such taxable year, plus 

14 ‘‘(2) with respect to each eligible military 

15 spouse employee participating in such plan, the less16 er of— 

17 ‘‘(A) the amount of employer contributions 

18 (other than any contribution described in sub19 paragraph (B) or (C) of section 25B(d)(1) 

20 made under all eligible employer plans on behalf 

21 of such eligible military spouse during the plan 

22 year ending with or within such taxable year, or 

23 ‘‘(B) $300. 

24 In the case of a defined benefit plan, the amount 

25 treated as an employer contribution under paraVerDate Sep 11 2014 05:59 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4173.IS S4173

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1 graph (2)(A) shall be the increase in the partici2 pant’s nonforfeitable accrued benefit (determined by 

3 using the rules of section 417(e)(3)) reduced by the 

4 amount of such increase attributable to employee 

5 contributions. 

6 ‘‘(b) ELIGIBLE EMPLOYER PLAN.—For purposes of 

7 this section, the term ‘eligible employer plan’ means a 

8 qualified employer plan (within the meaning of section 

9 4972(d)) in which all eligible military spouse employees 

10 of the covered small employer— 

11 ‘‘(1) are eligible to participate as of the later of 

12 the first day of the first plan year of the plan or the 

13 date the employee has been employed for at least 2 

14 months, 

15 ‘‘(2) are eligible to receive matching contribu16 tions (as defined in section 401(m)) and nonelective 

17 contributions in the same manner as an employee 

18 (other than a highly compensated employee) with at 

19 least 2 years of service, and 

20 ‘‘(3) are fully vested in their accrued benefit 

21 under the plan upon commencement of participation. 

22 ‘‘(c) COVERED SMALL EMPLOYER.—For purposes of 

23 this section, the term ‘covered small employer’ means an 

24 eligible employer (within the meaning of section 

25 408(p)(2)(C)(i)). 


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1 ‘‘(d) ELIGIBLE MILITARY SPOUSE EMPLOYEE.— 

2 ‘‘(1) IN GENERAL.—The term ‘eligible military 

3 spouse employee’ means any employee of the covered 

4 small employer who— 

5 ‘‘(A) has been employed by the employer 

6 for more than 2 months, 

7 ‘‘(B) is not a highly compensated employee 

8 (within the meaning of section 414(q)), and 

9 ‘‘(C) makes a certification to the small em10 ployer that, as of the date such employee is 

11 hired by the employer, such employee is mar12 ried to an individual who has performed service 

13 in the uniformed services (as defined in chapter 

14 43 of title 38, United States Code) while on ac15 tive duty for a period of more than 30 days (in16 cluding the date such employee is hired). 

17 Any certification under subparagraph (C) shall in18 clude the servicemember’s name, rank, and military 

19 branch and the employee’s uniformed services identi20 fication card number. 

21 ‘‘(2) LIMITATION.—An individual may not be 

22 treated as an eligible military spouse with respect to 

23 any covered small employer for more than 3 taxable 

24 years.’’. 


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1 (b) CREDIT TO BE PART OF GENERAL BUSINESS

2 CREDIT.—Section 38(b) of the Internal Revenue Code of 

3 1986 is amended by striking ‘‘plus’’ at the end of para4 graph (32), by striking the period at the end of paragraph 

5 (33) and inserting ‘‘, plus’’, and by adding at the end the 

6 following new paragraph: 

7 ‘‘(34) the military spouse employee retirement 

8 plan credit determined under section 45U(a).’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 for subpart D of part IV of subchapter A of chapter 1 

11 of the Internal Revenue Code of 1986 is amended by add12 ing at the end the following new item: 

‘‘Sec. 45U. Small employer provision of retirement savings for military 

spouses.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

Æ 


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