LOSAP CAP Act

Bill: 115-s-1239
Sponsor: full_name: Sen. Collins, Susan M. [R-ME]
Introduced: 2017-05-25
Policy area: Taxation
Subjects: Emergency medical services and trauma care

Employee benefits and pensions

Fires

First responders and emergency personnel

Health personnel

Income tax deferral

Inflation and prices

Social work, volunteer service, charitable organizations
Latest action: action_date: 2017-05-25
text: Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S3216-3217)

Summaries:
action_date: 2017-05-25
action_desc: Introduced in Senate
text: <p><b>Length of Service Award Program Cap Adjustment Priority Act or the LOSAP CAP Act </b></p> <p>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. </p> <p>(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.) </p> <p>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. </p>

tv_txt: II 115th CONGRESS 1st Session S. 1239 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.

1. Short title This Act may be cited as the Length of Service Award Program Cap Adjustment Priority Act or the LOSAP CAP Act . 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.