President Bush Signs HEART Act of 2008
June 25, 2008

On June 17, President George W. Bush signed into law the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008. This law amends the Internal Revenue Code of 1986 to provide benefits for military personnel and for other purposes, and has a number of provisions that apply to pension plans.

Following are some of the provisions related to pension plans included in the bill:

• Section 104 requires tax-qualified pension plans to entitle survivors of plan participants who die while on active military duty to additional benefits and benefit accruals provided under such plans for participants who resume and then terminate employment due to death;
• Section 107 makes permanent the penalty exemption for premature withdrawals from retirement plans for individuals called or ordered to active military duty on or after December 31, 2007;
• Section 109 allows a tax-free rollover of any military death gratuity and any group life insurance payment to a survivor's Roth individual retirement account (Roth IRA) or to an education savings account;
• Section 114 allows a tax-free distribution of unused health benefits in a health flexible spending arrangement to any member of an armed forces reserve component who is ordered or called to active duty.
• The bill also exempts certain state and local payments to and benefits for volunteer firefighters and emergency medical responders from federal employment and unemployment taxes.

The bill, which is similar to one that was passed in December 2007, was introduced on May 16 by Rep. Charles Rangel (D-NY).

It was passed unanimously by the House of Representatives on May 20 and by the Senate on May 22. The bill, as passed and sent for enactment, can be accessed by clicking here.