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.’’. 
(b) HEALTH
SAVINGS
ACCOUNTS
AND
ARCHER 
MSAS.—Sections 220(f)(5) and 223(f)(5) of the Internal 
Revenue Code of 1986 are each amended by adding at 
the end the following flush sentence: 
‘‘For purposes of subparagraphs (A) and (B), rules 
similar to the rules of section 408A(e)(2) (relating 
to rollover treatment for contributions of military 
death gratuity) shall apply.’’. 
(c) 
EDUCATION
SAVINGS
ACCOUNTS.—Section 
530(d)(5) of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new sentence: ‘‘For 
purposes of this paragraph, rules similar to the rules of 
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section 408A(e)(2) (relating to rollover treatment for con-
tributions of military death gratuity) shall apply.’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided by para-
graphs (2) and (3), the amendments made by this 
section shall apply with respect to deaths from inju-
ries occurring on or after the date of the enactment 
of this Act. 
(2) APPLICATION OF AMENDMENTS TO DEATHS 
FROM INJURIES OCCURRING ON OR AFTER OCTOBER 
7, 2001, AND
BEFORE
ENACTMENT.—The amend-
ments made by this section shall apply to any con-
tribution made pursuant to section 408A(e)(2), 
220(f)(5), 223(f)(5), or 530(d)(5) of the Internal 
Revenue Code of 1986, as amended by this Act, with 
respect to amounts received under section 1477 of 
title 10, United States Code, or under section 1967 
of title 38 of such Code, for deaths from injuries oc-
curring on or after October 7, 2001, and before the 
date of the enactment of this Act if such contribu-
tion is made not later than 1 year after the date of 
the enactment of this Act. 
(3) PENSION PROTECTION ACT CHANGES.—Sec-
tion 408A(e)(1) of the Internal Revenue Code of 
1986 (as in effect after the amendments made by 
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subsection (a)(2)) shall apply to taxable years begin-
ning after December 31, 2007. 
SEC. 5. TEMPORARY INCREASE IN STANDARD DEDUCTION 
FOR ACTIVE DUTY MILITARY PERSONNEL. 
(a) IN GENERAL.—Paragraph (3) of section 63(c) of 
the Internal Revenue Code of 1986 (defining additional 
standard deduction for the aged and blind) is amended 
to read as follows: 
‘‘(3) ADDITIONAL STANDARD DEDUCTION.—For 
the purposes of paragraph (1), the additional stand-
ard deduction is the sum of— 
‘‘(A) the sum of each additional amount to 
which the taxpayer is entitled under subsection 
(f), plus 
‘‘(B) in the case of a taxable year begin-
ning in 2007 or 2008, an additional amount of 
$1,000 for an individual for such taxable year 
if the individual who at any time during such 
taxable year is performing service in the uni-
formed services while on active duty for a pe-
riod of more than 30 days.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 3402(m)(3) of the the Internal Rev-
enue Code of 1986 is amended by striking ‘‘for the 
aged and blind’’. 
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(2) Section 6012(a)(1)(B) of such Code is 
amended by adding at the end the following new 
sentence: ‘‘The preceding sentence shall be applied 
without regard to section 63(c)(3)(B) and each of 
the amounts specified in subparagraph (A) shall be 
increased by the portion of any additional standard 
deduction to which the individual is entitled by rea-
son of section 63(c)(3)(B).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 6. ELECTION TO INCLUDE COMBAT PAY AS EARNED 
INCOME FOR PURPOSES OF EARNED INCOME 
TAX CREDIT. 
(a) IN GENERAL.—Clause (vi) of section 32(c)(2)(B) 
of the Internal Revenue Code of 1986 (defining earned 
income) is amended to read as follows: 
‘‘(vi) a taxpayer may elect to treat 
amounts excluded from gross income by 
reason of section 112 as earned income.’’. 
(b) PROVISION NOT SUBJECT TO EGTRRA SUN-
SET.—Section 105 of the Working Families Tax Relief 
Act of 2004 (relating to application of EGTRRA sunset 
to this title) shall not apply to section 104(b) of such Act. 
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(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years ending after De-
cember 31, 2007. 
SEC. 7. DISTRIBUTIONS FROM RETIREMENT PLANS TO IN-
DIVIDUALS CALLED TO ACTIVE DUTY. 
(a) IN GENERAL.—Clause (iv) of section 72(t)(2)(G) 
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘, and before December 31, 2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to individuals ordered or called to 
active duty on or after December 31, 2007. 
Æ 
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