ably equivalent terms and, if eligible to partici-
pate in a retirement plan maintained by the 
employer, to make contributions based on the 
payments on reasonably equivalent terms. For 
purposes of applying this subparagraph, the 
provisions of paragraphs (3), (4), and (5), of 
section 410(b) shall apply. 
‘‘(D) DIFFERENTIAL
WAGE
PAYMENT.— 
For purposes of this paragraph, the term ‘dif-
ferential wage payment’ has the meaning given 
such term by section 3401(h)(2).’’. 
(B) 
CONFORMING
AMENDMENT.—The 
heading for section 414(u) of such Code is 
amended by inserting ‘‘AND TO DIFFERENTIAL 
WAGE PAYMENTS
TO MEMBERS
ON ACTIVE 
DUTY’’ after ‘‘USERRA’’. 
(2) DIFFERENTIAL WAGE PAYMENTS TREATED 
AS
COMPENSATION
FOR
INDIVIDUAL
RETIREMENT 
PLANS.—Section 219(f)(1) of the Internal Revenue 
Code of 1986 (defining compensation) is amended 
by adding at the end the following new sentence: 
‘‘The term ‘compensation’ includes any differential 
wage payment (as defined in section 3401(h)(2)).’’. 
VerDate Aug 31 2005 
23:16 Oct 16, 2007
Jkt 059200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H3827.IH
H3827
mstockstill on PROD1PC66 with BILLS
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to years beginning 
after December 31, 2007. 
(c) PROVISIONS
RELATING
TO
PLAN
AMEND-
MENTS.— 
(1) IN GENERAL.—If this subsection applies to 
any plan or annuity contract amendment— 
(A) such plan or contract shall be treated 
as being operated in accordance with the terms 
of the plan or contract during the period de-
scribed in paragraph (2)(B)(i), and 
(B) except as provided by the Secretary of 
the Treasury, such plan shall not fail to meet 
the requirements of the Internal Revenue Code 
of 1986 or the Employee Retirement Income 
Security Act of 1974 by reason of such amend-
ment. 
(2) AMENDMENTS
TO
WHICH
SECTION
AP-
PLIES.— 
(A) IN
GENERAL.—This subsection shall 
apply to any amendment to any plan or annuity 
contract which is made— 
(i) pursuant to any amendment made 
by this section, and 
VerDate Aug 31 2005 
23:16 Oct 16, 2007
Jkt 059200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H3827.IH
H3827
mstockstill on PROD1PC66 with BILLS
(ii) on or before the last day of the 
first plan year beginning on or after Janu-
ary 1, 2009. 
(B) CONDITIONS.—This subsection shall 
not apply to any plan or annuity contract 
amendment unless— 
(i) during the period beginning on the 
date the amendment described in subpara-
graph (A)(i) takes effect and ending on the 
date described in subparagraph (A)(ii) (or, 
if earlier, the date the plan or contract 
amendment is adopted), the plan or con-
tract is operated as if such plan or con-
tract amendment were in effect, and 
(ii) such plan or contract amendment 
applies retroactively for such period. 
SEC. 4. CONTRIBUTIONS OF MILITARY DEATH GRATUITIES 
TO CERTAIN TAX-FAVORED ACCOUNTS. 
(a) ROTH IRAS.— 
(1) PROVISION
IN
EFFECT
BEFORE
PENSION 
PROTECTION ACT.—Subsection (e) of section 408A 
of the Internal Revenue Code of 1986 (relating to 
qualified rollover contribution), as in effect before 
the amendments made by section 824 of the Pension 
VerDate Aug 31 2005 
23:16 Oct 16, 2007
Jkt 059200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H3827.IH
H3827
mstockstill on PROD1PC66 with BILLS
Protection Act of 2006, is amended to read as fol-
lows: 
‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified rollover 
contribution’ means a rollover contribution to a Roth 
IRA from another such account, or from an indi-
vidual retirement plan, but only if such rollover con-
tribution 
meets 
the 
requirements 
of 
section 
408(d)(3). Such term includes a rollover contribu-
tion described in section 402A(c)(3)(A). For pur-
poses of section 408(d)(3)(B), there shall be dis-
regarded any qualified rollover contribution from an 
individual retirement plan (other than a Roth IRA) 
to a Roth IRA. 
‘‘(2) MILITARY DEATH GRATUITY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
rollover contribution’ includes a contribution to 
a Roth IRA maintained for the benefit of an in-
dividual to the extent that such contribution 
does not exceed the amount received by such in-
dividual under section 1477 of title 10, United 
States Code, or under section 1967 of title 38 
of such Code, if such contribution is made not 
VerDate Aug 31 2005 
23:16 Oct 16, 2007
Jkt 059200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H3827.IH
H3827
mstockstill on PROD1PC66 with BILLS
later than 1 year after the day on which such 
individual receives such amount. 
‘‘(B) ANNUAL
LIMIT
ON
NUMBER
OF 
ROLLOVERS
NOT
TO
APPLY.—Section 
408(d)(3)(B) shall not apply with respect to 
amounts treated as a rollover by the subpara-
graph (A). 
‘‘(C) APPLICATION OF SECTION 72.—For 
purposes of applying section 72 in the case of 
a distribution which is not a qualified distribu-
tion, the amount treated as a rollover by reason 
of subparagraph (A) shall be treated as invest-
ment in the contract.’’. 
(2) PROVISION
IN
EFFECT
AFTER
PENSION 
PROTECTION ACT.—Subsection (e) of section 408A, 
as in effect after the amendments made by section 
824 of the Pension Protection Act of 2006, is 
amended to read as follows: 
‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified rollover 
contribution’ means a rollover contribution— 
‘‘(A) to a Roth IRA from another such ac-
count, 
VerDate Aug 31 2005 
23:16 Oct 16, 2007
Jkt 059200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H3827.IH
H3827
mstockstill on PROD1PC66 with BILLS
‘‘(B) from an eligible retirement plan, but 
only if— 
‘‘(i) in the case of an individual retire-
ment plan, such rollover contribution meets 
the requirements of section 408(d)(3), and 
‘‘(ii) in the case of any eligible retire-
ment 
plan 
(as 
defined 
in 
section 
402(c)(8)(B) other than clauses (i) and (ii) 
thereof), such rollover contribution meets 
the 
requirements 
of 
section 
402(c), 
403(b)(8), or 457(e)(16), as applicable. 
For purposes of section 408(d)(3)(B), there shall be 
disregarded any qualified rollover contribution from 
an individual retirement plan (other than a Roth 
IRA) to a Roth IRA. 
‘‘(2) MILITARY DEATH GRATUITY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
rollover contribution’ includes a contribution to 
a Roth IRA maintained for the benefit of an in-
dividual to the extent that such contribution 
does not exceed the amount received by such in-
dividual under section 1477 of title 10, United 
States Code, or under section 1967 of title 38 
of such Code, if such contribution is made not 
VerDate Aug 31 2005 
23:16 Oct 16, 2007
Jkt 059200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H3827.IH
H3827
mstockstill on PROD1PC66 with BILLS