I 

111TH CONGRESS 

1ST SESSION H. R. 1413 

To amend the Internal Revenue Code of 1986 to allow certain public employees a deduction for distributions from governmental plans for health 

and long-term care insurance, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 10, 2009 

Mr. CROWLEY (for himself and Mr. MCHUGH) 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 allow certain public employees a deduction for distributions from 

governmental plans for health and long-term care insurance, 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 ‘‘Healthcare Enhance5 ment for Local Public Servants Act of 2009’’. 


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1 SEC. 2. DISTRIBUTIONS FROM GOVERNMENTAL PLANS FOR 

2 HEALTH AND LONG-TERM CARE INSURANCE 

3 ALLOWED FOR OTHER PUBLIC EMPLOYEES. 

4 (a) IN GENERAL.— 

5 (1) DISTRIBUTIONS ALLOWED FOR OTHER PUB6 LIC EMPLOYEES.—Paragraph (1) of section 402(l) 

7 of the Internal Revenue Code of 1986 (relating to 

8 distributions from governmental plans for health and 

9 long-term care insurance) is amended by striking 

10 ‘‘retired public safety officer who makes the election 

11 described in paragraph (6)’’ and inserting ‘‘retired 

12 public employee’’. 

13 (2) RETIRED PUBLIC EMPLOYEE.— 

14 (A) Paragraph (4) of section 402(l) of 

15 such Code is amended— 

16 (i) by striking ‘‘(B) ELIGIBLE RE17 TIRED PUBLIC SAFETY OFFICER.—The 

18 term ‘eligible retired public safety’ officer 

19 means’’ and all that follows through the 

20 period at the end and inserting the fol21 lowing: 

22 ‘‘(B) ELIGIBLE RETIRED PUBLIC EM23 PLOYEE.— 

24 ‘‘(i) IN GENERAL.—The term ‘eligible 

25 retired public employee’ means an indi26 vidual, who by reason of disability or atVerDate Nov 24 2008 23:10 Mar 10, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1413.IH H1413

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1 tainment of the earliest date on which he 

2 may retire and receive a retirement benefit 

3 from the governmental plan which is not 

4 reduced by reason of the individual’s age 

5 or years of service, separates from service 

6 as a public safety officer, public school per7 sonnel, or other public employee with the 

8 employer who maintains the eligible retire9 ment plan from which distributions subject 

10 to paragraph (1) are made.’’, 

11 (ii) by redesignating subparagraph 

12 (C) as clause (ii), by moving such clause 

13 (as so redesignated) 2 ems to the right, 

14 and by inserting after such clause (as so 

15 redesignated) the following new clauses: 

16 ‘‘(iii) PUBLIC SCHOOL PERSONNEL.— 

17 The term ‘public school personnel’ shall 

18 have the same meaning given such term by 

19 section 4151(10) of the elementary and 

20 secondary education Act of 1965 (20 

21 U.S.C. 7161(10)) whether employed by an 

22 institution of higher education (as defined 

23 in section 101 of the Higher Education 

24 Act of 1965 (20 U.S.C. 1001) or a local 

25 educational agency (as defined in section 


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1 9101 of the Elementary and Secondary 

2 Education Act of 1965 (20 U.S.C. 

3 7801(26)). 

4 ‘‘(iv) PUBLIC EMPLOYEE.—The term 

5 ‘public employee’ means any employee of a 

6 State, political subdivision of a State, or 

7 agency or instrumentality of a State or po8 litical subdivision of a State.’’. 

9 (3) CONFORMING AMENDMENT.— 

10 (A) Subsection (l) of section 402 of such 

11 Code (as amended by this section) is amended 

12 by striking ‘‘retired public safety officer’’ in 

13 each place it appears and inserting ‘‘retired 

14 public employee’’. 

15 (B) Subparagraph (D) of section 402(l)(4) 

16 of such Code is redesignated as subparagraph 

17 (C). 

18 (b) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to distributions in taxable years 

20 beginning after December 31, 2009. 

21 SEC. 3. DISTRIBUTION ALLOWED AS DEDUCTION RATHER 

22 THAN EXCLUDED FROM GROSS INCOME. 

23 (a) IN GENERAL.— 

24 (1) DEDUCTION ALLOWED.—Paragraph (1) of 

25 section 402(l) of the Internal Revenue Code of 1986 


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1 is amended by striking ‘‘gross income of such em2 ployee for such taxable year does not include’’ and 

3 all that follows through the period at the end and 

4 inserting the following: ‘‘there shall be allowed as a 

5 deduction from gross income for the taxable year an 

6 amount equal to the aggregate amount of distribu7 tions from an eligible retirement plan of the indi8 vidual in the taxable year to the extent that such 

9 amount does not exceed the amount paid by such 

10 employee or paid on behalf of such employee by de11 ductions from distributions by the eligible retirement 

12 plan to the providers of the accident or health plans 

13 or qualified long-term care contracts for qualified 

14 health premiums for such taxable year.’’ 

15 (2) DEDUCTION WITH RESPECT TO SURVIVING

16 SPOUSE.—Subsection (l) of section 402 of such Code 

17 is amended by striking paragraph (6) and inserting 

18 the following new paragraph: 

19 ‘‘(6) SPECIAL RULE FOR SURVIVING SPOUSE.— 

20 In the case of a deceased individual with respect to 

21 whom a deduction was allowed under paragraph (1) 

22 for the taxable year closed by reason of the individ23 ual’s death, the surviving spouse of such individual 

24 shall be treated as the employee with respect to the 


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1 plan for purposes of paragraph (1) for all subse2 quent taxable years.’’. 

3 (b) DEDUCTION ALLOWED WHETHER OR NOT TAX4 PAYER ITEMIZES.—Subsection (a) of section 62 of such 

5 Code is amended by inserting after paragraph (21) the 

6 following new paragraph: 

7 ‘‘(22) DISTRIBUTIONS FROM GOVERNMENTAL

8 RETIREMENT PLANS FOR HEALTH AND LONG-TERM

9 CARE INSURANCE FOR PUBLIC EMPLOYEES.—The 

10 deduction allowed by section 402(l).’’. 

11 (c) CONFORMING AMENDMENTS.— 

12 (1) Paragraph (1) of section 402(l) of such 

13 Code is amended by striking ‘‘of the employee, his 

14 spouse, or dependents (as defined in section 152)’’. 

15 (2) Paragraph (2) of section 402(l) of such 

16 Code is amended by striking ‘‘The amount which 

17 may be excluded from gross income for the taxable 

18 year by reason of paragraph (1)’’ and inserting 

19 ‘‘The amount allowable as a deduction under para20 graph (1) for the taxable year’’. 

21 (3) Paragraph (3) of section 402(l) of such 

22 Code is amended to read as follows: 

23 ‘‘(3) DISTRIBUTIONS MUST BE INCLUDED IN

24 GROSS INCOME.—An amount shall be treated as a 

25 distribution for purposes of paragraph (1) only to 


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1 the extent that such amount is included in gross in2 come for the taxable year.’’. 

3 (4) Paragraph (7) and (8) of section 402(l) of 

4 such Code are each amended by striking ‘‘The 

5 amounts excluded from gross income’’ and inserting 

6 ‘‘Any amount allowable as a deduction’’. 

7 (5) Subsection (a) of section 403 of such Code 

8 is amended by striking paragraph (2). 

9 (6) Subsection (a) of section 457 of such Code 

10 is amended by striking paragraph (3). 

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

12 this section shall apply to distributions in taxable years 

13 beginning after December 31, 2009. 

14 SEC. 4. FURTHER MODIFICATIONS RELATING TO 402(l). 

15 (a) IN GENERAL.— 

16 (1) Subsection (l) of section 402 of the Internal 

17 Revenue Code of 1986 is amended by adding at the 

18 end the following new paragraph: 

19 ‘‘(9) COST-OF-LIVING ADJUSTMENT.—In the 

20 case of taxable years beginning after December 31, 

21 2009, the Secretary shall adjust the $3,000 amount 

22 under paragraph (2) at the same time and in the 

23 same manner as under section 415(d), except that 

24 the base period shall be the calendar quarter begin25 ning July 1, 2008, and any increase under this 


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1 paragraph which is not a multiple of $100 shall be 

2 rounded to the next lowest multiple of $100.’’. 

3 (2) Subparagraph (A) of section 402(l)(4) of 

4 such Code (defining eligible retirement plan) is 

5 amended to read as follows: 

6 ‘‘(A) ELIGIBLE RETIREMENT PLAN.—For 

7 purposes of paragraph (1), the term ‘eligible re8 tirement plan’ means a plan described in— 

9 ‘‘(i) subsection (c)(8)(B)(iii) (and is a 

10 governmental plan within the meaning of 

11 section 414(d)), 

12 ‘‘(ii) subsection (c)(8)(B)(iv) (and is 

13 maintained by an employer which is a 

14 State, a political subdivision of a State, or 

15 an agency or instrumentality of a State or 

16 political subdivision of a State), 

17 ‘‘(iii) subsection (c)(8)(B)(v), or 

18 ‘‘(iv) subsection (c)(8)(B)(vi) (and is 

19 maintained by an employer which is a 

20 State, a political subdivision of a State, or 

21 an agency or instrumentality of a State or 

22 political subdivision of a State).’’. 

23 (3) Subparagraph (C) of section 402(l)(4) of 

24 such Code (as redesignated by this Act) is amend25 ed— 


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1 (A) by inserting ‘‘(as defined in section 

2 152, determined without regard to subsections 

3 (b)(1), (b)(2), and (d)(1)(B) thereof)’’ after 

4 ‘‘dependents’’, and 

5 (B) by striking ‘‘insurance’’. 

6 (4) Paragraph (5) of section 402(l) of such 

7 Code is amended to read as follows: 

8 ‘‘(5) RELATED PLANS TREATED AS 1 PLAN.— 

9 For purposes of this subsection, all eligible retire10 ment plans of an employer shall be treated as a sin11 gle plan.’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to distributions in taxable years 

14 beginning after December 31, 2009. 

Æ 


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