Title: Military Spouses Retirement Security Act
Policy area: Taxation

Summary:
Military Spouses Retirement Security Act
This bill allows a tax credit for certain small businesses that include military spouses in their retirement plans.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4173 Introduced in Senate (IS)]

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116th CONGRESS
  2d Session
                                S. 4173

To amend the Internal Revenue Code of 1986 to provide a credit to small 
    employers for covering military spouses under retirement plans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              July 2, 2020

Ms. Collins (for herself and Ms. Hassan) 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 provide a credit to small 
    employers for covering military spouses under retirement 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 ``Military Spouses Retirement Security 
Act''.

SEC. 2. CREDIT FOR SMALL EMPLOYERS PROVIDING RETIREMENT PLANS FOR 
              MILITARY SPOUSES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. SMALL EMPLOYER PROVISION OF RETIREMENT SAVINGS FOR MILITARY 
              SPOUSES.

    ``(a) In General.--For purposes of section 38, in the case of a 
covered small employer, the military spouse employee retirement plan 
credit determined under this section for the taxable year is an amount 
equal to the sum of--
            ``(1) $200 for each eligible military spouse employee who 
        is eligible to participate in an eligible employer plan during 
        the plan year ending with or within such taxable year, plus
            ``(2) with respect to each eligible military spouse 
        employee participating in such plan, the lesser of--
                    ``(A) the amount of employer contributions (other 
                than any contribution described in subparagraph (B) or 
                (C) of section 25B(d)(1) made under all eligible 
                employer plans on behalf of such eligible military 
                spouse during the plan year ending with or within such 
                taxable year, or
                    ``(B) $300.
        In the case of a defined benefit plan, the amount treated as an 
        employer contribution under paragraph (2)(A) shall be the 
        increase in the participant's nonforfeitable accrued benefit 
        (determined by using the rules of section 417(e)(3)) reduced by 
        the amount of such increase attributable to employee 
        contributions.
    ``(b) Eligible Employer Plan.--For purposes of this section, the 
term `eligible employer plan' means a qualified employer plan (within 
the meaning of section 4972(d)) in which all eligible military spouse 
employees of the covered small employer--
            ``(1) are eligible to participate as of the later of the 
        first day of the first plan year of the plan or the date the 
        employee has been employed for at least 2 months,
            ``(2) are eligible to receive matching contributions (as 
        defined in section 401(m)) and nonelective contributions in the 
        same manner as an employee (other than a highly compensated 
        employee) with at least 2 years of service, and
            ``(3) are fully vested in their accrued benefit under the 
        plan upon commencement of participation.
    ``(c) Covered Small Employer.--For purposes of this section, the 
term `covered small employer' means an eligible employer (within the 
meaning of section 408(p)(2)(C)(i)).
    ``(d) Eligible Military Spouse Employee.--
            ``(1) In general.--The term `eligible military spouse 
        employee' means any employee of the covered small employer 
        who--
                    ``(A) has been employed by the employer for more 
                than 2 months,
                    ``(B) is not a highly compensated employee (within 
                the meaning of section 414(q)), and
                    ``(C) makes a certification to the small employer 
                that, as of the date such employee is hired by the 
                employer, such employee is married to an individual who 
                has performed service in the uniformed services (as 
                defined in chapter 43 of title 38, United States Code) 
                while on active duty for a period of more than 30 days 
                (including the date such employee is hired).
        Any certification under subparagraph (C) shall include the 
        servicemember's name, rank, and military branch and the 
        employee's uniformed services identification card number.
            ``(2) Limitation.--An individual may not be treated as an 
        eligible military spouse with respect to any covered small 
        employer for more than 3 taxable years.''.
    (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
the Internal Revenue Code of 1986 is amended by striking ``plus'' at 
the end of paragraph (32), by striking the period at the end of 
paragraph (33) and inserting ``, plus'', and by adding at the end the 
following new paragraph:
            ``(34) the military spouse employee retirement plan 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 the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

``Sec. 45U. Small employer provision of retirement savings for military 
                            spouses.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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