SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO QUALIFIED MILITARY SERVICE.

SEC. 104. SURVIVOR AND DISABILITY PAYMENTS WITH RESPECT TO QUALIFIED MILITARY SERVICE.(a) Plan Qualification Requirement for Death Benefits Under USERRA-Qualified Active Military Service.—Subsection (a) of section 401 (relating to requirements for qualification) is amended by inserting after paragraph (36) the following new paragraph:“(37) Death benefits under userra-qualified active military service.—A trust shall not constitute a qualified trust unless the plan provides that, in the case of a participant who dies while performing qualified military service (as defined in section 414(u)), the survivors of the participant are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the plan had the participant resumed and then terminated employment on account of death.”.(b) Treatment in the Case of Death or Disability Resulting From Active Military Service for Benefit Accrual Purposes.—Subsection (u) of section 414 (relating to special rules relating to veterans’ reemployment rights under USERRA) is amended by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively, and by inserting after paragraph (8) the following new paragraph:“(9) Treatment in the case of death or disability resulting from active military service.—“(A) In general.—For benefit accrual purposes, an employer sponsoring a retirement plan may treat an individual who dies or becomes disabled (as defined under the terms of the plan) while performing qualified military service with respect to the employer maintaining the plan as if the individual has resumed employment in accordance with the individual’s reemployment rights under chapter 43 of title 38, United States Code, on the day preceding death or disability (as the case may be) and terminated employment on the actual date of death or disability. In the case of any such treatment, and subject to subparagraphs (B) and (C), any full or partial compliance by such plan with respect to the benefit accrual requirements of paragraph (8) with respect to such individual shall be treated for purposes of paragraph (1) as if such compliance were required under such chapter 43.“(B) Nondiscrimination requirement.—Subparagraph (A) shall apply only if all individuals performing qualified military service with respect to the employer maintaining the plan (as determined under subsections (b), (c), (m), and (o)) who die or became disabled as a 122 STAT. 1627 result of performing qualified military service prior to reemployment by the employer are credited with service and benefits on reasonably equivalent terms.“(C) Determination of benefits.—The amount of employee contributions and the amount of elective deferrals of an individual treated as reemployed under subparagraph (A) for purposes of applying paragraph (8)(C) shall be determined on the basis of the individual’s average actual employee contributions or elective deferrals for the lesser of—“(i) the 12-month period of service with the employer immediately prior to qualified military service, or“(ii) if service with the employer is less than such 12-month period, the actual length of continuous service with the employer.”.(c) Conforming Amendments.—(1) Section 404(a)(2) is amended by striking “and (31)” and inserting “(31), and (37)”.(2) Section 403(b) is amended by adding at the end the following new paragraph:“(14) Death benefits under userra-qualified active military service.—This subsection shall not apply to an annuity contract unless such contract meets the requirements of section 401(a)(37).”.(3) Section 457(g) is amended by adding at the end the following new paragraph:“(4) Death benefits under userra-qualified active military service.—A plan described in paragraph (1) shall not be treated as an eligible deferred compensation plan unless such plan meets the requirements of section 401(a)(37).”.(d) Effective Date.—(1) In general.—The amendments made by this section shall apply with respect to deaths and disabilities occurring on or after January 1, 2007.(2) Provisions relating to plan amendments.—(A) In general.—If this subparagraph applies to any plan or contract amendment, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subparagraph (B)(iii).(B) Amendments to which subparagraph (A) applies.—(i) In general.—Subparagraph (A) shall apply to any amendment to any plan or annuity contract which is made—(I) pursuant to the amendments made by subsection (a) or pursuant to any regulation issued by the Secretary of the Treasury under subsection (a), and(II) on or before the last day of the first plan year beginning on or after January 1, 2010.In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), this clause shall be applied by substituting “2012” for “2010” in subclause (II).122 STAT. 1628(ii) Conditions.—This paragraph shall not apply to any amendment unless—(I) the plan or contract is operated as if such plan or contract amendment were in effect for the period described in clause (iii), and(II) such plan or contract amendment applies retroactively for such period.(iii) Period described.—The period described in this clause is the period—(I) beginning on the effective date specified by the plan, and(II) ending on the date described in clause (i)(II) (or, if earlier, the date the plan or contract amendment is adopted).