II 

109TH CONGRESS 

1ST SESSION S. 1142 

To provide pay protection for members of the Reserve and the National 

Guard, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 26, 2005 

Ms. LANDRIEU (for herself, Mr. GRAHAM, Mr. ALLEN, Mr. DURBIN, and Mr. 

LAUTENBERG) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To provide pay protection for members of the Reserve and 

the National Guard, and for other purposes. 

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 ‘‘Helping Our Patriotic 

5 Employers at Helping Our Military Employees Act of 

6 2005’’ or the ‘‘HOPE at HOME Act of 2005’’. 
2 

•S 1142 IS

1 SEC. 2. NONREDUCTION IN PAY WHILE FEDERAL EM2 PLOYEE IS PERFORMING ACTIVE SERVICE IN 

3 THE UNIFORMED SERVICES. 

4 (a) IN GENERAL.—Subchapter IV of chapter 55 of 

5 title 5, United States Code, is amended by adding at the 

6 end the following: 

7 ‘‘§ 5538. Nonreduction in pay while serving in the 

8 uniformed services 

9 ‘‘(a) An employee who is absent from a position of 

10 employment with the Federal Government in order to per11 form service in the uniformed services for a period of more 

12 than 90 days shall be entitled to receive, for each pay pe13 riod described in subsection (b), an amount equal to the 

14 amount by which— 

15 ‘‘(1) the amount of basic pay which would oth16 erwise have been payable to such employee for such 

17 pay period if such employee’s civilian employment 

18 with the Government had not been interrupted by 

19 that service, exceeds (if at all) 

20 ‘‘(2) the amount of pay and allowances which 

21 (as determined under subsection (d))— 

22 ‘‘(A) is payable to such employee for that 

23 service; and 

24 ‘‘(B) is allocable to such pay period. 

25 ‘‘(b)(1) Amounts under this section shall be payable 

26 with respect to each pay period (which would otherwise 
3 

•S 1142 IS

1 apply if the employee’s civilian employment had not been 

2 interrupted)— 

3 ‘‘(A) during which such employee is entitled to 

4 reemployment rights under chapter 43 of title 38 

5 with respect to the position from which such em6 ployee is absent (as referred to in subsection (a)); 

7 and 

8 ‘‘(B) for which such employee does not other9 wise receive basic pay (including by taking any an10 nual, military, or other paid leave) to which such 

11 employee is entitled by virtue of such employee’s ci12 vilian employment with the Government. 

13 ‘‘(2) For purposes of this section, the period during 

14 which an employee is entitled to reemployment rights 

15 under chapter 43 of title 38— 

16 ‘‘(A) shall be determined disregarding the provi17 sions of section 4312(d) of title 38; and 

18 ‘‘(B) shall include any period of time specified 

19 in section 4312(e) of title 38 within which an em20 ployee may report or apply for employment or reem21 ployment following completion of service in the uni22 formed services. 

23 ‘‘(c) Any amount payable under this section to an em24 ployee shall be paid— 

25 ‘‘(1) by such employee’s employing agency; 
4 

•S 1142 IS

1 ‘‘(2) from the appropriation or fund which 

2 would be used to pay the employee if such employee 

3 were in a pay status; and 

4 ‘‘(3) to the extent practicable, at the same time 

5 and in the same manner as would basic pay if such 

6 employee’s civilian employment had not been inter7 rupted. 

8 ‘‘(d) The Office of Personnel Management shall, in 

9 consultation with Secretary of Defense, prescribe any reg10 ulations necessary to carry out the preceding provisions 

11 of this section. 

12 ‘‘(e)(1) The head of each agency referred to in section 

13 2302(a)(2)(C)(ii) shall, in consultation with the Office, 

14 prescribe procedures to ensure that the rights under this 

15 section apply to the employees of such agency. 

16 ‘‘(2) The Administrator of the Federal Aviation Ad17 ministration shall, in consultation with the Office, pre18 scribe procedures to ensure that the rights under this sec19 tion apply to the employees of that agency. 

20 ‘‘(f) For purposes of this section— 

21 ‘‘(1) the terms ‘employee’, ‘Federal Govern22 ment’, and ‘uniformed services’ have the same re23 spective meanings as given in section 4303 of title 

24 38; 
5 

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1 ‘‘(2) the term ‘service in the uniformed services’ 

2 has the meaning given that term in section 4303 of 

3 title 38 and includes duty performed by a member 

4 of the National Guard under section 502(f) of title 

5 32 at the direction of the Secretary of the Army or 

6 Secretary of the Air Force; 

7 ‘‘(3) the term ‘employing agency’, as used with 

8 respect to an employee entitled to any payments 

9 under this section, means the agency or other entity 

10 of the Government (including an agency referred to 

11 in section 2302(a)(2)(C)(ii)) with respect to which 

12 such employee has reemployment rights under chap13 ter 43 of title 38; and 

14 ‘‘(4) the term ‘basic pay’ includes any amount 

15 payable under section 5304.’’. 

16 (b) CLERICAL AMENDMENT.—The table of sections 

17 for chapter 55 of title 5, United States Code, is amended 

18 by inserting after the item relating to section 5537 the 

19 following: 

‘‘5538. Nonreduction in pay while serving in the uniformed services or National 

Guard.’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply with respect to pay periods (as de22 scribed in section 5538(b) of title 5, United States Code, 

23 as added by this section) beginning on or after September 

24 11, 2001. 
6 

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1 SEC. 3. READY RESERVE-NATIONAL GUARD EMPLOYEE 

2 CREDIT ADDED TO GENERAL BUSINESS 

3 CREDIT. 

4 (a) READY RESERVE-NATIONAL GUARD CREDIT.— 

5 Subpart D of part IV of subchapter A of chapter 1 of 

6 the Internal Revenue Code of 1986 (relating to business7 related credits) is amended by adding at the end the fol8 lowing: 

9 ‘‘SEC. 45J. READY RESERVE-NATIONAL GUARD EMPLOYEE 

10 CREDIT. 

11 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

12 the Ready Reserve-National Guard employee credit deter13 mined under this section for any taxable year is an amount 

14 equal to 50 percent of the actual compensation amount 

15 for such taxable year. 

16 ‘‘(b) DEFINITION OF ACTUAL COMPENSATION

17 AMOUNT.—For purposes of this section, the term ‘actual 

18 compensation amount’ means the amount of compensation 

19 paid or incurred by an employer with respect to a Ready 

20 Reserve-National Guard employee on any day during a 

21 taxable year when the employee was absent from employ22 ment for the purpose of performing qualified active duty. 

23 ‘‘(c) LIMITATION.—No credit shall be allowed with 

24 respect to a Ready Reserve-National Guard employee who 

25 performs qualified active duty on any day on which the 
7 

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1 employee was not scheduled to work (for reason other than 

2 to participate in qualified active duty). 

3 ‘‘(d) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) QUALIFIED ACTIVE DUTY.—The term 

5 ‘qualified active duty’ means— 

6 ‘‘(A) active duty, other than the training 

7 duty specified in section 10147 of title 10, 

8 United States Code (relating to training re9 quirements for the Ready Reserve), or section 

10 502(a) of title 32, United States Code (relating 

11 to required drills and field exercises for the Na12 tional Guard), in connection with which an em13 ployee is entitled to reemployment rights and 

14 other benefits or to a leave of absence from em15 ployment under chapter 43 of title 38, United 

16 States Code, and 

17 ‘‘(B) hospitalization incident to such duty. 

18 ‘‘(2) COMPENSATION.—The term ‘compensa19 tion’ means any remuneration for employment, 

20 whether in cash or in kind, which is paid or incurred 

21 by a taxpayer and which is deductible from the tax22 payer’s gross income under section 162(a)(1). 

23 ‘‘(3) READY RESERVE-NATIONAL GUARD EM24 PLOYEE.—The term ‘Ready Reserve-National Guard 

25 employee’ means an employee who is a member of 
8 

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1 the Ready Reserve of a reserve component of an 

2 Armed Force of the United States as described in 

3 sections 10142 and 10101 of title 10, United States 

4 Code. 

5 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 

6 to the rules of section 52 shall apply. 

7 ‘‘(e) PORTION OF CREDIT MADE REFUNDABLE.— 

8 ‘‘(1) IN GENERAL.—In the case of an eligible 

9 employer of a Ready Reserve-National Guard em10 ployee, the aggregate credits allowed to a taxpayer 

11 under subpart C shall be increased by the lesser 

12 of— 

13 ‘‘(A) the credit which would be allowed 

14 under this section without regard to this sub15 section and the limitation under section 38(c), 

16 or 

17 ‘‘(B) the amount by which the aggregate 

18 amount of credits allowed by this subpart (de19 termined without regard to this subsection) 

20 would increase if the limitation imposed by sec21 tion 38(c) for any taxable year were increased 

22 by the amount of employer payroll taxes im23 posed on the taxpayer during the calendar year 

24 in which the taxable year begins. 
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1 The amount of the credit allowed under this sub2 section shall not be treated as a credit allowed under 

3 this subpart and shall reduce the amount of the 

4 credit otherwise allowable under subsection (a) with5 out regard to section 38(c). 

6 ‘‘(2) ELIGIBLE EMPLOYER.—For purposes of 

7 this subsection, the term ‘eligible employer’ means 

8 an employer which is a State or local government or 

9 subdivision thereof. 

10 ‘‘(3) EMPLOYER PAYROLL TAXES.—For pur11 poses of this subsection— 

12 ‘‘(A) IN GENERAL.—The term ‘employer 

13 payroll taxes’ means the taxes imposed by— 

14 ‘‘(i) section 3111(b), and 

15 ‘‘(ii) sections 3211(a) and 3221(a) 

16 (determined at a rate equal to the rate 

17 under section 3111(b)). 

18 ‘‘(B) SPECIAL RULE.—A rule similar to 

19 the rule of section 24(d)(2)(C) shall apply for 

20 purposes of subparagraph (A).’’. 

21 (b) CREDIT TO BE PART OF GENERAL BUSINESS

22 CREDIT.—Subsection (b) of section 38 of such Code (re23 lating to general business credit) is amended by striking 

24 ‘‘plus’’ at the end of paragraph (18), by striking the period 
10 

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1 at the end of paragraph (19) and inserting ‘‘, plus’’, and 

2 by adding at the end the following: 

3 ‘‘(20) the Ready Reserve-National Guard em4 ployee credit determined under section 45J(a).’’. 

5 (c) DENIAL OF DOUBLE BENEFIT.—Section 280C(a) 

6 (relating to rule for employment credits) is amended by 

7 inserting ‘‘45J(a),’’ after ‘‘45A(a),’’. 

8 (d) CONFORMING AMENDMENT.—The table of sec9 tions for subpart D of part IV of subchapter A of chapter 

10 1 of the Internal Revenue Code of 1986 is amended by 

11 inserting after the item relating to section 45I the fol12 lowing: 

‘‘Sec. 45J. Ready Reserve-National Guard employee credit.’’. 

13 (e) 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. 

16 SEC. 4. READY RESERVE-NATIONAL GUARD REPLACEMENT 

17 EMPLOYEE CREDIT. 

18 (a) IN GENERAL.—Subpart B of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of 

20 1986 (relating to foreign tax credit, etc.) is amended by 

21 adding after section 30A the following new section: 

22 ‘‘SEC. 30B. READY RESERVE-NATIONAL GUARD REPLACE23 MENT EMPLOYEE CREDIT. 

24 ‘‘(a) ALLOWANCE OF CREDIT.— 
11 

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1 ‘‘(1) IN GENERAL.—In the case of an eligible 

2 taxpayer, there shall be allowed as a credit against 

3 the tax imposed by this chapter for the taxable year 

4 the sum of the employment credits for each qualified 

5 replacement employee under this section. 

6 ‘‘(2) EMPLOYMENT CREDIT.—The employment 

7 credit with respect to a qualified replacement em8 ployee of the taxpayer for any taxable year is equal 

9 to 50 percent of the lesser of— 

10 ‘‘(A) the individual’s qualified compensa11 tion attributable to service rendered as a quali12 fied replacement employee, or 

13 ‘‘(B) $12,000. 

14 ‘‘(b) QUALIFIED COMPENSATION.—The term ‘quali15 fied compensation’ means— 

16 ‘‘(1) compensation which is normally contingent 

17 on the qualified replacement employee’s presence for 

18 work and which is deductible from the taxpayer’s 

19 gross income under section 162(a)(1), 

20 ‘‘(2) compensation which is not characterized 

21 by the taxpayer as vacation or holiday pay, or as 

22 sick leave or pay, or as any other form of pay for 

23 a nonspecific leave of absence, and 

24 ‘‘(3) group health plan costs (if any) with re25 spect to the qualified replacement employee. 
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1 ‘‘(c) QUALIFIED REPLACEMENT EMPLOYEE.—For 

2 purposes of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified re4 placement employee’ means an individual who is 

5 hired to replace a Ready Reserve-National Guard 

6 employee or a Ready Reserve-National Guard self7 employed taxpayer, but only with respect to the pe8 riod during which— 

9 ‘‘(A) such Ready Reserve-National Guard 

10 employee is receiving an actual compensation 

11 amount (as defined in section 45J(b)) from the 

12 employee’s employer and is participating in 

13 qualified active duty, including time spent in 

14 travel status, or 

15 ‘‘(B) such Ready Reserve-National Guard 

16 self-employed taxpayer is participating in such 

17 qualified active duty. 

18 ‘‘(2) READY RESERVE-NATIONAL GUARD EM19 PLOYEE.—The term ‘Ready Reserve-National Guard 

20 employee’ has the meaning given such term by sec21 tion 45J(d)(3). 

22 ‘‘(3) READY RESERVE-NATIONAL GUARD SELF23 EMPLOYED TAXPAYER.—The term ‘Ready Reserve24 National Guard self-employed taxpayer’ means a 

25 taxpayer who— 
13 

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1 ‘‘(A) has net earnings from self-employ2 ment (as defined in section 1402(a)) for the 

3 taxable year, and 

4 ‘‘(B) is a member of the Ready Reserve of 

5 a reserve component of an Armed Force of the 

6 United States as described in section 10142 

7 and 10101 of title 10, United States Code. 

8 ‘‘(d) COORDINATION WITH OTHER CREDITS.—The 

9 amount of credit otherwise allowable under sections 51(a) 

10 and 1396(a) with respect to any employee shall be reduced 

11 by the credit allowed by this section with respect to such 

12 employee. 

13 ‘‘(e) LIMITATIONS.— 

14 ‘‘(1) APPLICATION WITH OTHER CREDITS.— 

15 The credit allowed under subsection (a) for any tax16 able year shall not exceed the excess (if any) of— 

17 ‘‘(A) the regular tax for the taxable year 

18 reduced by the sum of the credits allowable 

19 under subpart A and sections 27, 29, and 30, 

20 over 

21 ‘‘(B) the tentative minimum tax for the 

22 taxable year. 

23 ‘‘(2) DISALLOWANCE FOR FAILURE TO COMPLY

24 WITH EMPLOYMENT OR REEMPLOYMENT RIGHTS OF

25 MEMBERS OF THE RESERVE COMPONENTS OF THE
14 

•S 1142 IS

1 ARMED FORCES OF THE UNITED STATES.—No credit 

2 shall be allowed under subsection (a) to a taxpayer 

3 for— 

4 ‘‘(A) any taxable year, beginning after the 

5 date of the enactment of this section, in which 

6 the taxpayer is under a final order, judgment, 

7 or other process issued or required by a district 

8 court of the United States under section 4323 

9 of title 38 of the United States Code with re10 spect to a violation of chapter 43 of such title, 

11 and 

12 ‘‘(B) the 2 succeeding taxable years. 

13 ‘‘(f) GENERAL DEFINITIONS AND SPECIAL RULES.— 

14 For purposes of this section— 

15 ‘‘(1) ELIGIBLE TAXPAYER.—The term ‘eligible 

16 taxpayer’ means a small business employer or a 

17 Ready Reserve-National Guard self-employed tax18 payer. 

19 ‘‘(2) SMALL BUSINESS EMPLOYER.— 

20 ‘‘(A) IN GENERAL.—The term ‘small busi21 ness employer’ means, with respect to any tax22 able year, any employer who employed an aver23 age of 50 or fewer employees on business days 

24 during such taxable year. 
15 

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1 ‘‘(B) CONTROLLED GROUPS.—For pur2 poses of subparagraph (A), all persons treated 

3 as a single employer under subsection (b), (c), 

4 (m), or (o) of section 414 shall be treated as a 

5 single employer. 

6 ‘‘(3) QUALIFIED ACTIVE DUTY.—The term 

7 ‘qualified active duty’ has the meaning given such 

8 term by section 45J(d)(1). 

9 ‘‘(4) SPECIAL RULES FOR CERTAIN MANUFAC10 TURERS.— 

11 ‘‘(A) IN GENERAL.—In the case of any 

12 qualified manufacturer— 

13 ‘‘(i) subsection (a)(2)(B) shall be ap14 plied by substituting ‘$20,000’ for 

15 ‘$12,000’, and 

16 ‘‘(ii) paragraph (2)(A) of this sub17 section shall be applied by substituting 

18 ‘100’ for ‘50’. 

19 ‘‘(B) QUALIFIED MANUFACTURER.—For 

20 purposes of this paragraph, the term ‘qualified 

21 manufacturer’ means any person if— 

22 ‘‘(i) the primary business of such per23 son is classified in sector 31, 32, or 33 of 

24 the North American Industrial Classifica25 tion System, and 
16 

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1 ‘‘(ii) all of such person’s facilities 

2 which are used for production in such busi3 ness are located in the United States. 

4 ‘‘(5) CARRYBACK AND CARRYFORWARD AL5 LOWED.— 

6 ‘‘(A) IN GENERAL.—If the credit allowable 

7 under subsection (a) for a taxable year exceeds 

8 the amount of the limitation under subsection 

9 (e)(1) for such taxable year (in this paragraph 

10 referred to as the ‘unused credit year’), such 

11 excess shall be a credit carryback to each of the 

12 3 taxable years preceding the unused credit 

13 year and a credit carryforward to each of the 

14 20 taxable years following the unused credit 

15 year. 

16 ‘‘(B) RULES.—Rules similar to the rules of 

17 section 39 shall apply with respect to the credit 

18 carryback and credit carryforward under sub19 paragraph (A). 

20 ‘‘(6) CERTAIN RULES TO APPLY.—Rules similar 

21 to the rules of subsections (c), (d), and (e) of section 

22 52 shall apply.’’. 

23 (b) NO DEDUCTION FOR COMPENSATION TAKEN

24 INTO ACCOUNT FOR CREDIT.—Section 280C(a) of the In-
17 

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1 ternal Revenue Code of 1986 (relating to rule for employ2 ment credits), as amended by this Act, is amended— 

3 (1) by inserting ‘‘or compensation’’ after ‘‘sala4 ries’’, and 

5 (2) by inserting ‘‘30B,’’ before ‘‘45A(a),’’. 

6 (c) CONFORMING AMENDMENT.—Section 55(c)(2) of 

7 the Internal Revenue Code of 1986 is amended by insert8 ing ‘‘30B(e)(1),’’ after ‘‘30(b)(3),’’. 

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

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

11 of the Internal Revenue Code of 1986 is amended by add12 ing after the item relating to section 30A the following 

13 new item: 

‘‘Sec. 30B. Credit for replacement of activated military reservists.’’. 

14 (e) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 5. INCOME TAX WITHHOLDING ON DIFFERENTIAL 

18 WAGE PAYMENTS. 

19 (a) IN GENERAL.—Section 3401 of the Internal Rev20 enue Code of 1986 (relating to definitions) is amended by 

21 adding at the end the following new subsection: 

22 ‘‘(i) DIFFERENTIAL WAGE PAYMENTS TO ACTIVE

23 DUTY MEMBERS OF THE UNIFORMED SERVICES.— 

24 ‘‘(1) IN GENERAL.—For purposes of subsection 

25 (a), any differential wage payment shall be treated 
18 

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1 as a payment of wages by the employer to the em2 ployee. 

3 ‘‘(2) DIFFERENTIAL WAGE PAYMENT.—For 

4 purposes of paragraph (1), the term ‘differential 

5 wage payment’ means any payment which— 

6 ‘‘(A) is made by an employer to an indi7 vidual with respect to any period during which 

8 the individual is performing service in the uni9 formed services while on active duty for a pe10 riod of more than 30 days, and 

11 ‘‘(B) represents all or a portion of the 

12 wages the individual would have received from 

13 the employer if the individual were performing 

14 service for the employer.’’. 

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

16 this section shall apply to remuneration paid after Decem17 ber 31, 2004. 

18 SEC. 6. TREATMENT OF DIFFERENTIAL WAGE PAYMENTS 

19 FOR RETIREMENT PLAN PURPOSES. 

20 (a) PENSION PLANS.— 

21 (1) IN GENERAL.—Section 414(u) of the Inter22 nal Revenue Code of 1986 (relating to special rules 

23 relating to veterans’ reemployment rights under 

24 USERRA) is amended by adding at the end the fol25 lowing new paragraph: 
19 

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1 ‘‘(11) TREATMENT OF DIFFERENTIAL WAGE

2 PAYMENTS.— 

3 ‘‘(A) IN GENERAL.—Except as provided in 

4 this paragraph, for purposes of applying this 

5 title to a retirement plan to which this sub6 section applies— 

7 ‘‘(i) an individual receiving a differen8 tial wage payment shall be treated as an 

9 employee of the employer making the pay10 ment, 

11 ‘‘(ii) the differential wage payment 

12 shall be treated as compensation, and 

13 ‘‘(iii) the plan shall not be treated as 

14 failing to meet the requirements of any 

15 provision described in paragraph (1)(C) by 

16 reason of any contribution which is based 

17 on the differential wage payment. 

18 ‘‘(B) SPECIAL RULE FOR DISTRIBU19 TIONS.— 

20 ‘‘(i) IN GENERAL.—Notwithstanding 

21 subparagraph (A)(i), for purposes of sec22 tion 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 

23 403(b)(11)(A), or 457(d)(1)(A)(ii), an in24 dividual shall be treated as having been 

25 severed from employment during any pe-
20 

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1 riod the individual is performing service in 

2 the uniformed services described in section 

3 3401(i)(2)(A). 

4 ‘‘(ii) LIMITATION.—If an individual 

5 elects to receive a distribution by reason of 

6 clause (i), the plan shall provide that the 

7 individual may not make an elective defer8 ral or employee contribution during the 6- 

9 month period beginning on the date of the 

10 distribution. 

11 ‘‘(C) NONDISCRIMINATION REQUIRE12 MENT.—Subparagraph (A)(iii) shall apply only 

13 if all employees of an employer performing serv14 ice in the uniformed services described in sec15 tion 3401(i)(2)(A) are entitled to receive dif16 ferential wage payments on reasonably equiva17 lent terms and, if eligible to participate in a re18 tirement plan maintained by the employer, to 

19 make contributions based on the payments. For 

20 purposes of applying this subparagraph, the 

21 provisions of paragraphs (3), (4), and (5), of 

22 section 410(b) shall apply. 

23 ‘‘(D) DIFFERENTIAL WAGE PAYMENT.— 

24 For purposes of this paragraph, the term ‘dif-
21 

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1 ferential wage payment’ has the meaning given 

2 such term by section 3401(i)(2).’’. 

3 (2) CONFORMING AMENDMENT.—The heading 

4 for section 414(u) of such Code is amended by in5 serting ‘‘AND TO DIFFERENTIAL WAGE PAYMENTS

6 TO MEMBERS ON ACTIVE DUTY’’ after ‘‘USERRA’’. 

7 (b) DIFFERENTIAL WAGE PAYMENTS TREATED AS

8 COMPENSATION FOR INDIVIDUAL RETIREMENT PLANS.— 

9 Section 219(f)(1) of the Internal Revenue Code of 1986 

10 (defining compensation) is amended by adding at the end 

11 the following new sentence: ‘‘The term ‘compensation’ in12 cludes any differential wage payment (as defined in sec13 tion 3401(i)(2)).’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to plan years beginning after De16 cember 31, 2004. 

17 (d) PROVISIONS RELATING TO PLAN AMEND18 MENTS.— 

19 (1) IN GENERAL.—If this subsection applies to 

20 any plan or annuity contract amendment— 

21 (A) such plan or contract shall be treated 

22 as being operated in accordance with the terms 

23 of the plan or contract during the period de24 scribed in paragraph (2)(B)(i), and 
22 

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1 (B) except as provided by the Secretary of 

2 the Treasury, such plan shall not fail to meet 

3 the requirements of the Internal Revenue Code 

4 of 1986 or the Employee Retirement Income 

5 Security Act of 1974 by reason of such amend6 ment. 

7 (2) AMENDMENTS TO WHICH SECTION AP8 PLIES.— 

9 (A) IN GENERAL.—This subsection shall 

10 apply to any amendment to any plan or annuity 

11 contract which is made— 

12 (i) pursuant to any amendment made 

13 by this section, and 

14 (ii) on or before the last day of the 

15 first plan year beginning on or after Janu16 ary 1, 2007. 

17 (B) CONDITIONS.—This subsection shall 

18 not apply to any plan or annuity contract 

19 amendment unless— 

20 (i) during the period beginning on the 

21 date the amendment described in subpara22 graph (A)(i) takes effect and ending on the 

23 date described in subparagraph (A)(ii) (or, 

24 if earlier, the date the plan or contract 

25 amendment is adopted), the plan or con-
23 

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1 tract is operated as if such plan or con2 tract amendment were in effect, and 

3 (ii) such plan or contract amendment 

4 applies retroactively for such period. 

Æ