Military Spouses Retirement Security Act

II 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Military Spouses Re- 4 tirement Security Act’’. 5 SEC. 2. CREDIT FOR SMALL EMPLOYERS PROVIDING RE- 6 TIREMENT PLANS FOR MILITARY SPOUSES. 7 (a) IN GENERAL.—Subpart D of part IV of sub- 8 chapter A of chapter 1 of the Internal Revenue Code of 9 VerDate Sep 11 2014 05:59 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4173.IS S4173 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4173 IS 1986 is amended by adding at the end the following new 1 section: 2 ‘‘SEC. 45U. SMALL EMPLOYER PROVISION OF RETIREMENT 3 SAVINGS FOR MILITARY SPOUSES. 4 ‘‘(a) IN GENERAL.—For purposes of section 38, in 5 the case of a covered small employer, the military spouse 6 employee retirement plan credit determined under this 7 section for the taxable year is an amount equal to the sum 8 of— 9 ‘‘(1) $200 for each eligible military spouse em- 10 ployee who is eligible to participate in an eligible em- 11 ployer plan during the plan year ending with or 12 within such taxable year, plus 13 ‘‘(2) with respect to each eligible military 14 spouse employee participating in such plan, the less- 15 er of— 16 ‘‘(A) the amount of employer contributions 17 (other than any contribution described in sub- 18 paragraph (B) or (C) of section 25B(d)(1) 19 made under all eligible employer plans on behalf 20 of such eligible military spouse during the plan 21 year ending with or within such taxable year, or 22 ‘‘(B) $300. 23 In the case of a defined benefit plan, the amount 24 treated as an employer contribution under para- 25 VerDate Sep 11 2014 05:59 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4173.IS S4173 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4173 IS graph (2)(A) shall be the increase in the partici- 1 pant’s nonforfeitable accrued benefit (determined by 2 using the rules of section 417(e)(3)) reduced by the 3 amount of such increase attributable to employee 4 contributions. 5 ‘‘(b) ELIGIBLE EMPLOYER PLAN.—For purposes of 6 this section, the term ‘eligible employer plan’ means a 7 qualified employer plan (within the meaning of section 8 4972(d)) in which all eligible military spouse employees 9 of the covered small employer— 10 ‘‘(1) are eligible to participate as of the later of 11 the first day of the first plan year of the plan or the 12 date the employee has been employed for at least 2 13 months, 14 ‘‘(2) are eligible to receive matching contribu- 15 tions (as defined in section 401(m)) and nonelective 16 contributions in the same manner as an employee 17 (other than a highly compensated employee) with at 18 least 2 years of service, and 19 ‘‘(3) are fully vested in their accrued benefit 20 under the plan upon commencement of participation. 21 ‘‘(c) COVERED SMALL EMPLOYER.—For purposes of 22 this section, the term ‘covered small employer’ means an 23 eligible employer (within the meaning of section 24 408(p)(2)(C)(i)). 25 VerDate Sep 11 2014 05:59 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4173.IS S4173 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4173 IS ‘‘(d) ELIGIBLE MILITARY SPOUSE EMPLOYEE.— 1 ‘‘(1) IN GENERAL.—The term ‘eligible military 2 spouse employee’ means any employee of the covered 3 small employer who— 4 ‘‘(A) has been employed by the employer 5 for more than 2 months, 6 ‘‘(B) is not a highly compensated employee 7 (within the meaning of section 414(q)), and 8 ‘‘(C) makes a certification to the small em- 9 ployer that, as of the date such employee is 10 hired by the employer, such employee is mar- 11 ried to an individual who has performed service 12 in the uniformed services (as defined in chapter 13 43 of title 38, United States Code) while on ac- 14 tive duty for a period of more than 30 days (in- 15 cluding the date such employee is hired). 16 Any certification under subparagraph (C) shall in- 17 clude the servicemember’s name, rank, and military 18 branch and the employee’s uniformed services identi- 19 fication card number. 20 ‘‘(2) LIMITATION.—An individual may not be 21 treated as an eligible military spouse with respect to 22 any covered small employer for more than 3 taxable 23 years.’’. 24 VerDate Sep 11 2014 05:59 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4173.IS S4173 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4173 IS (b) CREDIT TO BE PART OF GENERAL BUSINESS 1 CREDIT.—Section 38(b) of the Internal Revenue Code of 2 1986 is amended by striking ‘‘plus’’ at the end of para- 3 graph (32), by striking the period at the end of paragraph 4 (33) and inserting ‘‘, plus’’, and by adding at the end the 5 following new paragraph: 6 ‘‘(34) the military spouse employee retirement 7 plan credit determined under section 45U(a).’’. 8 (c) CLERICAL AMENDMENT.—The table of sections 9 for subpart D of part IV of subchapter A of chapter 1 10 of the Internal Revenue Code of 1986 is amended by add- 11 ing at the end the following new item: 12 ‘‘Sec. 45U. Small employer provision of retirement savings for military spouses.’’. (d) EFFECTIVE DATE.—The amendments made by 13 this section shall apply to taxable years beginning after 14 the date of the enactment of this Act. 15 Æ VerDate Sep 11 2014 05:59 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S4173.IS S4173 pbinns on DSKJLVW7X2PROD with BILLS