II

104TH CONGRESS

1ST SESSION S. 831

To amend the Internal Revenue Code of 1986 to clarify the tax treatment

of certain contributions made pursuant to veterans’ reemployment.

IN THE SENATE OF THE UNITED STATES

MAY 19 (legislative day, MAY 15), 1995

Mr. ROCKEFELLER (for himself and Mr. SIMPSON) 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 clarify

the tax treatment of certain contributions made pursuant

to veterans’ reemployment.

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 CONTRIBUTIONS

4 MADE PURSUANT TO VETERANS’ REEMPLOY5 MENT RIGHTS.

6 (a) IN GENERAL.—Section 414 of the Internal Reve7 nue Code of 1986 is amended by adding at the end the

8 following new subsection:

9 ‘‘(u) SPECIAL RULES RELATING TO VETERANS’ RE10 EMPLOYMENT RIGHTS.—
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1 ‘‘(1) TREATMENT OF CERTAIN REQUIRED CON2 TRIBUTIONS.—If any contribution is made by an

3 employer under an individual account plan with re4 spect to an employee and such contribution is re5 quired by reason of such employee’s rights under

6 chapter 43 of title 38, United States Code, resulting

7 from qualified military service—

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

9 to any otherwise applicable limitation contained

10 in section 402(g), 403(b), 404(a), 408, 415, or

11 457, and

12 ‘‘(B) such plan shall not be treated as fail13 ing to meet any requirement of this part or sec14 tion 457 by reason of the making of such con15 tribution and such contribution shall not be

16 taken into account in applying the limitations

17 referred to in subparagraph (A) to other con18 tributions.

19 For purposes of the preceding sentence, any addi20 tional elective deferral made under paragraph (2)

21 shall be treated as an employer contribution required

22 by reason of the employee’s rights under such chap23 ter 43.

24 ‘‘(2) REEMPLOYMENT RIGHTS WITH RESPECT

25 TO ELECTIVE DEFERRALS.—
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1 ‘‘(A) IN GENERAL.—If an employee is enti2 tled to the benefits of chapter 43 of title 38,

3 United States Code, with respect to any plan

4 which provides for elective deferrals, such em5 ployer shall be treated as meeting the require6 ments of such chapter 43 with respect to such

7 elective deferrals if such employer—

8 ‘‘(i) permits such employee to make

9 additional elective deferrals under such

10 plan (in the amount determined under sub11 paragraph (B)) during the period which

12 begins on the date of the reemployment

13 and whose duration is the lesser of—

14 ‘‘(I) 5 years; or

15 ‘‘(II) 3 times the period of quali16 fied military service which resulted in

17 such rights; and

18 ‘‘(ii) makes a matching contribution

19 in respect of any additional elective defer20 ral made pursuant to clause (i) which

21 would have been required had such defer22 ral actually been made during the period of

23 such qualified military service.

24 ‘‘(B) AMOUNT OF MAKEUP REQUIRED.—

25 The amount determined under this subpara-
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1 graph is the maximum amount of elective defer2 rals that the individual would have been per3 mitted to make under the plan during his pe4 riod of qualified military service if he had con5 tinued to be employed by the employer during

6 such period and received compensation at the

7 rate computed in accordance with section

8 4318(b)(3) of title 38. Proper adjustment shall

9 be made to the amount determined under the

10 preceding sentence for any elective deferrals ac11 tually made during the period of such qualified

12 military service.

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

14 of this paragraph, the term ‘elective deferral’

15 has the meaning given to such term by section

16 402(g)(3); except that such term shall include

17 any deferral of compensation under an eligible

18 deferred compensation plan (as defined in sec19 tion 457(b)).

20 ‘‘(3) LOAN REPAYMENT SUSPENSIONS PER21 MITTED.—If any plan suspends the repayment of

22 any loan made to an individual for the period while

23 such individual is performing qualified military serv24 ice, such suspension shall not be taken into account

25 for purposes of section 72(p).
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1 ‘‘(4) QUALIFIED MILITARY SERVICE.—For pur2 poses of this subsection, the term ‘qualified military

3 service’ means any service in the uniformed services

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

5 Code) by any individual if such individual is entitled

6 to reemployment rights under such chapter 43, with

7 respect to such service.

8 ‘‘(5) INDIVIDUAL ACCOUNT PLAN.—For pur9 poses of this subsection, the term ‘individual account

10 plan’ means any defined contribution plan and any

11 eligible deferred compensation plan (as defined in

12 section 457(b)).’’.

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

14 subsection (a) shall take effect as of September 2, 1974,

15 and shall apply to plans as if such amendment were en16 acted on such date as part of section 414 of the Internal

17 Revenue Code of 1954.

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