TREATMENT OF LENGTH OF SERVICE AWARDS TO VOLUNTEERS PERFORMING FIRE FIGHTING OR PREVENTION SERVICES, EMERGENCY MEDICAL SERVICES, OR AMBULANCE SERVICES.

SEC. 1458. TREATMENT OF LENGTH OF SERVICE AWARDS TO VOLUNTEERS PERFORMING FIRE FIGHTING OR PREVENTION SERVICES, EMERGENCY MEDICAL SERVICES, OR AMBULANCE SERVICES. (a) In General.— Paragraph (11) of section 457(e) (relating to deferred compensation plans of State and locai governments and tax-exempt organizations) is amended to read as follows: “(11) Certain plans excluded.— “(A) In general.— The following plans shall be treated as not providing for the deferral of compensation: “(i) Any bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plan. “(ii) Any plan paying solely length of service awards to bona fide volunteers (or their beneficiaries) on account of qualified services performed by such volunteers. “(B) Special rules applicable to length of service award plans.— “(i) Bona fide volunteer.— An individual shall be treated as a bona fide volunteer for purposes of subparagraph (A)(ii) if the only compensation received by such individual for performing qualified services is in the form of— “(I) reimbursement for (or a reasonable allowance for) reasonable expenses incurred in the performance of such services, or “(II) reasonable benefits (including length of service awards), and nominal fees for such services, customarily paid by eligible employers in connection with the performance of such services by volunteers. “(ii) Limitation on accruals.— A plan shall not be treated as described in subparagraph (A)(ii) if the aggregate amount of length of service awards accruing with respect to any year of service for any bona fide volunteer exceeds $3,000. “(C) Qualified services.— For purposes of this paragraph, the term ‘qualified services’ means fire fighting and prevention services, emergency medical services, and ambulance services.”. (b) Exemption From Social Security Taxes.— 110 STAT. 1820 (1) Subsection (a)(5) of section 3121, as amended by section 1421, is amended by striking “(or)” at the end of subparagraph (G), by inserting “or” at the end of subparagraph (H), and by adding at the end the following new subparagraph: “(I) under a plan described in section 457(e)(11)(A)(ii) and maintained by an eligible employer (as defined in section 457(e)(1)).”. (2) Section 209(a)(4) of the Social Security Act is amended by inserting “; or (K) under a plan described in section 457(e)(11)(A)(ii) of the Internal Revenue Code of 1986 and maintained by an eligible employer (as defined in section 457(e)(1) of such Code)” before the semicolon at the end thereof. (c) Effective Date.— (1) Subsection (a).— The amendment made by subsection (a) shall apply to accruals of length of service awards after December 31, 1996. (2) Subsection (b).— The amendments made by subsection (b) shall apply to remuneration paid after December 31, 1996.