CONTRIBUTIONS OF MILITARY DEATH GRATUITIES TO ROTH IRAS AND EDUCATION SAVINGS ACCOUNTS.

SEC. 109. CONTRIBUTIONS OF MILITARY DEATH GRATUITIES TO ROTH IRAS AND EDUCATION SAVINGS ACCOUNTS.(a) Provision in Effect Before Pension Protection Act.—Subsection (e) of section 408A (relating to qualified rollover contribution), as in effect before the amendments made by section 824 of the Pension Protection Act of 2006, is amended to read as follows:“(e) Qualified Rollover Contribution.—For purposes of this section—“(1) In general.—The term ‘qualified rollover contribution’ means a rollover contribution to a Roth IRA from another such account, or from an individual retirement plan, but only if such rollover contribution meets the requirements of section 408(d)(3). Such term includes a rollover contribution described in section 402A(c)(3)(A). For purposes of section 408(d)(3)(B), there shall be disregarded any qualified rollover contribution from an individual retirement plan (other than a Roth IRA) to a Roth IRA.“(2) Military death gratuity.—“(A) In general.—The term ‘qualified rollover contribution’ includes a contribution to a Roth IRA maintained for the benefit of an individual made before the end of the 1-year period beginning on the date on which such individual receives an amount under section 1477 of title 10, United States Code, or section 1967 of title 38 of such Code, with respect to a person, to the extent that such contribution does not exceed—“(i) the sum of the amounts received during such period by such individual under such sections with respect to such person, reduced by“(ii) the amounts so received which were contributed to a Coverdell education savings account under section 530(d)(9).“(B) Annual limit on number of rollovers not to apply.—Section 408(d)(3)(B) shall not apply with respect to amounts treated as a rollover by subparagraph (A).“(C) Application of section 72.—For purposes of applying section 72 in the case of a distribution which 122 STAT. 1632 is not a qualified distribution, the amount treated as a rollover by reason of subparagraph (A) shall be treated as investment in the contract.”.(b) Provision in Effect After Pension Protection Act.—Subsection (e) of section 408A, as in effect after the amendments made by section 824 of the Pension Protection Act of 2006, is amended to read as follows:“(e) Qualified Rollover Contribution.—For purposes of this section—“(1) In general.—The term ‘qualified rollover contribution’ means a rollover contribution—“(A) to a Roth IRA from another such account,“(B) from an eligible retirement plan, but only if—“(i) in the case of an individual retirement plan, such rollover contribution meets the requirements of section 408(d)(3), and“(ii) in the case of any eligible retirement plan (as defined in section 402(c)(8)(B) other than clauses (i) and (ii) thereof), such rollover contribution meets the requirements of section 402(c), 403(b)(8), or 457(e)(16), as applicable.For purposes of section 408(d)(3)(B), there shall be disregarded any qualified rollover contribution from an individual retirement plan (other than a Roth IRA) to a Roth IRA.“(2) Military death gratuity.—“(A) In general.—The term ‘qualified rollover contribution’ includes a contribution to a Roth IRA maintained for the benefit of an individual made before the end of the 1-year period beginning on the date on which such individual receives an amount under section 1477 of title 10, United States Code, or section 1967 of title 38 of such Code, with respect to a person, to the extent that such contribution does not exceed—“(i) the sum of the amounts received during such period by such individual under such sections with respect to such person, reduced by“(ii) the amounts so received which were contributed to a Coverdell education savings account under section 530(d)(9).“(B) Annual limit on number of rollovers not to apply.—Section 408(d)(3)(B) shall not apply with respect to amounts treated as a rollover by the subparagraph (A).“(C) Application of section 72.—For purposes of applying section 72 in the case of a distribution which is not a qualified distribution, the amount treated as a rollover by reason of subparagraph (A) shall be treated as investment in the contract.”.(c) Education Savings Accounts.—Subsection (d) of section 530 is amended by adding at the end the following new paragraph:“(9) Military death gratuity.—“(A) In general.—For purposes of this section, the term ‘rollover contribution’ includes a contribution to a Coverdell education savings account made before the end of the 1-year period beginning on the date on which the contributor receives an amount under section 1477 of title 10, United States Code, or section 1967 of title 38 of such 122 STAT. 1633 Code, with respect to a person, to the extent that such contribution does not exceed—“(i) the sum of the amounts received during such period by such contributor under such sections with respect to such person, reduced by“(ii) the amounts so received which were contributed to a Roth IRA under section 408A(e)(2) or to another Coverdell education savings account.“(B) Annual limit on number of rollovers not to apply.—The last sentence of paragraph (5) shall not apply with respect to amounts treated as a rollover by the subparagraph (A).“(C) Application of section 72.—For purposes of applying section 72 in the case of a distribution which is includible in gross income under paragraph (1), the amount treated as a rollover by reason of subparagraph (A) shall be treated as investment in the contract.”.(d) Effective Dates.—(1) In general.—Except as provided by paragraphs (2) and (3), the amendments made by this section shall apply with respect to deaths from injuries occurring on or after the date of the enactment of this Act.(2) Application of amendments to deaths from injuries occurring on or after october 7, 2001, and before enactment.—The amendments made by this section shall apply to any contribution made pursuant to section 408A(e)(2) or 530(d)(5) of the Internal Revenue Code of 1986, as amended by this Act, with respect to amounts received under section 1477 of title 10, United States Code, or under section 1967 of title 38 of such Code, for deaths from injuries occurring on or after October 7, 2001, and before the date of the enactment of this Act if such contribution is made not later than 1 year after the date of the enactment of this Act.(3) Pension protection act changes.—Section 408A(e)(1) of the Internal Revenue Code of 1986 (as in effect after the amendments made by subsection (b)) shall apply to taxable years beginning after December 31, 2007.