Military Spouses Retirement Security Act

To amend the Internal Revenue Code of 1986 to allow a credit to small employers with respect to each employee who is a military spouse and eligible to participate in a defined contribution plan of the employer. 1. Short title This Act may be cited as the Military Spouses Retirement Security Act 2. Military spouse retirement plan eligibility credit for small employers (a) In general Subpart D of part IV of subchapter A of chapter 1 45U. Military spouse retirement plan eligibility credit for small employers (a) In general For purposes of section 38, in the case of any eligible small employer, the military spouse retirement plan eligibility credit determined under this section for any taxable year is an amount equal to the sum of— (1) $250 with respect to each military spouse who is an employee of such employer and who is eligible to participate in an eligible defined contribution plan of such employer at any time during such taxable year, plus (2) so much of the contributions made by such employer to all such plans with respect to such employee during such taxable year as do not exceed $250. (b) Limitation An individual shall only be taken into account as a military spouse under subsection (a) for the taxable year which includes the date on which such individual began participating in the eligible defined contribution plan of the employer and the 2 succeeding taxable years. (c) Eligible small employer For purposes of this section— (1) In general The term eligible small employer (2) Application of 2-year grace period A rule similar to the rule of section 408(p)(2)(C)(i)(II) shall apply for purposes of this section. (d) Military spouse For purposes of this section— (1) In general The term military spouse (2) Exclusion of highly compensated employees With respect to any employer, the term military spouse (e) Eligible defined contribution plan For purposes of this section, the term eligible defined contribution plan (1) military spouses employed by such employer are eligible to participate in such plan not later than the date which is 2 months after the date on which such individual begins employment with such employer, and (2) military spouses who are eligible to participate in such plan— (A) are immediately eligible to receive an amount of employer contributions under such plan which is not less than the amount of such contributions that a similarly situated participant who is not a military spouse would be eligible to receive under such plan after 2 years of service, and (B) immediately have a nonforfeitable right to the employee’s accrued benefit derived from employer contributions under such plan. (f) Aggregation rule All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as one employer for purposes of this section. . (b) Credit allowed as part of general business credit Section 38(b) of such Code is amended by striking plus , plus (34) in the case of an eligible small employer (as defined in section 45U(c)), the military spouse retirement plan eligibility credit determined under section 45U(a). . (c) Clerical amendment The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 45U. Military spouse retirement plan eligibility credit for small employers. . (d) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

Summary: Military Spouses Retirement Security Act This bill allows a small business employer a tax credit for each employee who is a military spouse and eligible to participate in the employer's defined contribution retirement plan.