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Compliance May 27, 2008
Activating Reservist Aid Bill Enroute to the White House
May 27, 2008 (PLANSPONSOR.com) - The U.S. Senate has
sanctioned a bill allowing reservists being activated for
military duty to take a tax-free distribution of their
flexible spending account balances.
Reported by Fred Schneyer
Business Insurance reported the measure cleared the Senate as it had the House —on a unanimous vote.
The measure allows for the distributions for those called up for at least six months. The FSA measures, as well as the measure’s numerous other reservist aid items, take effect upon signing by the president (See House Bill Extends Benefits Breaks to Active Reservists).
The bill also would :
- Make permanent the expiring Internal Revenue Code provision that allows active duty reservists to make penalty-free withdrawals from retirement plans;
- Modify the Uniformed Services Employment and Re-employment Rights Act (USERRA) to allow the day prior to the date of death to be treated as the date the employee returned to work for purposes of triggering payment of benefits under a qualified plan;
- Permit an employer to make certain contributions to a qualified pension plan on behalf of an employee who is killed or becomes disabled in combat;
- Permit recipients of military death benefit gratuities to roll over the amounts received, tax-free, to a Roth IRA or an Education Savings Account; and
- Clarify that active military who file a joint tax return would be eligible for the stimulus rebate payment even if the spouse does not have a Social Security number.
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