Title: LOSAP CAP Act
Policy area: Taxation

Summary:
Length of Service Award Program Cap Adjustment Priority Act or the LOSAP CAP Act
This bill amends the Internal Revenue Code, with respect to deferred compensation plans, to increase the limit on accruals that is required for length of service award plans (LOSAPs) for bona fide volunteers to be exempt from treatment as a deferred compensation plan.
(Under current law, plans paying solely length of service awards to bona fide volunteers or their beneficiaries on the account of firefighting and prevention services, emergency medical services, and ambulance services performed by the volunteers are not treated as deferred compensation plans if they meet certain requirements. One of the requirements is a limit on the aggregate amount of length of service awards that may accrue with respect to any year of service for any bona fide volunteer.)
The bill modifies the limit on accruals to: (1) increase the limit from $3,000 to $6,000; (2) provide for a cost-of-living adjustment to the limit after 2017; and (3) specify that, in the case of LOSAPs that are defined benefit plans, the limit applies to the actuarial present value of the aggregate amount of length of service awards accruing with respect to any year of service.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1239 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 1239

    To amend the Internal Revenue Code of 1986 to modify the rules 
              applicable to length of service award plans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 25, 2017

 Ms. Collins (for herself, Mr. Cardin, and Mr. Schumer) 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 modify the rules 
              applicable to length of service award plans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Length of Service Award Program Cap 
Adjustment Priority Act'' or the ``LOSAP CAP Act''.

SEC. 2. MODIFICATION OF RULES APPLICABLE TO LENGTH OF SERVICE AWARD 
              PLANS.

    (a) Maximum Deferral Amount.--Clause (ii) of section 457(e)(11)(B) 
of the Internal Revenue Code of 1986 is amended by striking ``$3,000'' 
and inserting ``$6,000''.
    (b) Cost of Living Adjustment.--Subparagraph (B) of section 
457(e)(11) of the Internal Revenue Code of 1986 is amended by adding at 
the end the following:
                            ``(iii) Cost of living adjustment.--In the 
                        case of taxable years beginning after December 
                        31, 2017, the Secretary shall adjust the $6,000 
                        amount under clause (ii) at the same time and 
                        in the same manner as under section 415(d), 
                        except that the base period shall be the 
                        calendar quarter beginning July 1, 2016, and 
                        any increase under this paragraph that is not a 
                        multiple of $500 shall be rounded to the next 
                        lowest multiple of $500.''.
    (c) Application of Limitation on Accruals.--Subparagraph (B) of 
section 457(e)(11) of the Internal Revenue Code of 1986, as amended by 
subsection (b), is amended by adding at the end the following:
                            ``(iv) Special rule for application of 
                        limitation on accruals for certain plans.--In 
                        the case of a plan described in subparagraph 
                        (A)(ii) which is a defined benefit plan (as 
                        defined in section 414(j)), the limitation 
                        under clause (ii) shall apply to the actuarial 
                        present value of the aggregate amount of length 
                        of service awards accruing with respect to any 
                        year of service. Such actuarial present value 
                        with respect to any year shall be calculated 
                        using reasonable actuarial assumptions and 
                        methods, assuming payment will be made under 
                        the most valuable form of payment under the 
                        plan with payment commencing at the later of 
                        the earliest age at which unreduced benefits 
                        are payable under the plan or the participant's 
                        age at the time of the calculation.''.
    (d) Effective Date.--The amendments made by this Act shall apply to 
taxable years beginning after December 31, 2017.
                                 <all>