Gaurdsmen and Reservists Financial Relief Act of 2003

GUARDSMEN AND RESERVISTS FINANCIAL RELIEF ACT OF 2003 -- (House of Representatives - April 21, 2004)

Mr. SHAW. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 1779) to amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from retirement plans during the period that a military reservist or national guardsman is called to active duty for an extended period, and for other purposes.

The Clerk read as follows:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Guardsmen and Reservists Financial Relief Act of 2003".

SEC. 2. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 179 DAYS.

(a) IN GENERAL.-Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 (relating to 10-percent additional tax on early distributions from qualified retirement plans) is amended by adding at the end the following new subparagraph:

"(G) DISTRIBUTIONS FROM RETIREMENT PLANS TO INDIVIDUALS CALLED TO ACTIVE DUTY.-

"(i) IN GENERAL.-Any qualified reservist distribution.

"(ii) AMOUNT DISTRIBUTED MAY BE REPAID.-Any individual who receives a qualified reservist distribution may, at any time during the 2-year period beginning on the day after the end of the active duty period, make one or more contributions to an individual retirement plan of such individual in an aggregate amount not to exceed the amount of such distribution. The dollar limitations otherwise applicable to contributions to individual retirement plans shall not apply to any contribution made pursuant to the preceding sentence. No deduction shall be allowed for any contribution pursuant to this clause.

"(iii) QUALIFIED RESERVIST DISTRIBUTION.-For purposes of this subparagraph, the term 'qualified reservist distribution' means any distribution to an individual if-

"(I) such distribution is from an individual retirement plan, or from amounts attributable to employer contributions made pursuant to elective deferrals described in subparagraph (A) or (C) of section 402(g)(3) or section 501(c)(18)(D)(iii),

"(II) such individual was (by reason of being a member of a reserve component (as defined in section 101 of title 37, United States Code)), ordered or called to active duty for a period in excess of 179 days or for an indefinite period, and

"(III) such distribution is made during the period beginning on the date of such order or call and ending at the close of the active duty period.

"(iv) APPLICATION OF SUBPARAGRAPH.-This subparagraph applies to individuals ordered or called to active duty after September 11, 2001, and before September 12, 2005. In no event shall the 2-year period referred to in clause (ii) end before the date which is 2-years after the date of the enactment of this subparagraph."

(b) CONFORMING AMENDMENTS.-

(1) Section 401(k)(2)(B)(i) of such Code is amended by striking "or" at the end of subclause (III), by striking "and" at the end of subclause (IV) and inserting "or", and by inserting after subclause (IV) the following new subclause:

"(V) the date on which a period referred to in section 72(t)(2)(G)(iii)(III) begins, and".

(2) Section 403(b)(11) of such Code is amended by striking "or" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", or", and by inserting after subparagraph (B) the following new subparagraph:

"© for distributions to which section 72(t)(2)(G) applies."

© EFFECTIVE DATE.-The amendment made by this section shall apply to distributions after September 11, 2001.

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Mr. SPRATT. Madam Speaker, there is nothing wrong with this bill as far as it goes. What we are trying to argue here is we need to go further, particularly at this point in time. The gentleman mentioned the Committee on Armed Services. When we had the last supplemental appropriation on the floor, $87 billion, I offered a package of benefits that went to family assistance, family separation pay, imminent danger pay, Tricare for reservists, a number of different things that we could and probably will have to do because of recruitment and retention problems that we will face down the road, but should do out of gratitude for our troops and particularly our Reserve and Guard components.

So I hope we can get the cooperation of both sides of the aisle in crafting a package for the upcoming mark of the defense authorization bill which will address many areas here where things can be done positively that go far beyond this bill.

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Mr. SPRATT. Madam Speaker, H.R. 1779 amends the Internal Revenue Code of 1986 to allow penalty-free retirement account withdrawals for national guardsmen and reservists called to active duty for an extended, and further authorizes a 2-year period to reimburse their accounts up to the amount withdrawn. I think you would be hard pressed to find a Member of Congress who opposes this low cost bill to benefit our troops. My only question is: Shouldn't we do more? The answer is clearly yes. I agree in spirit with this bill, but when I compare it with what the troops truly deserve, I'm reminded of the commercial, "Where's the beef?" come up short. The mere fact that we are considering legislation that allows guardsmen and reservists to withdraw funds from their retirement accounts indicates the problem. A solution for this problem must include more "beef" than simply allowing our service members to borrow from their long term savings to meet their short term obligations. A true solution lies in the form of better benefits.

Our troops, both active and reserve need and deserve better family separation and imminent danger pay. Reservists serving in Afghanistan and Iraq need TRICARE military health coverage. Retirees deserve better survivor benefits for military widows and our military families deserve better housing.

Recent events in Afghanistan and Iraq highlight the perils of war. In the FY03 Emergency Supplemental Appropriations bill, imminent danger pay, additional compensation provided to servicemen and women in combat zones, was raised to $225 from $150 a month. The family separation allowance, which goes to help military families pay rent, child care or other expenses while service members are away, was raised from $100 to $250 a month. Congress should act now to make these increases permanent. This will show our troops that we are aware of the hardships they face not only in the field, but also at home.

The Supplemental Appropriations bill also provided limited and temporary TRICARE benefits for Reservists. It stopped short of providing expanded health care benefits to members of the selected reserve and certain members of the Individual Ready Reserve and their families.

Representative JEFF MILLER's bill to end the survivor Benefit Plan (SBP) widow's tax has 303 co-sponsors, but may never make it to the floor for a vote. Congress should act on this important legislation.

We have thousands of service members and their families living in substandard housing. The Military Housing Privatization Initiative (MHPI) was passed to remedy this injustice. A spending cap was set as a safeguard. We anticipate reaching the spending cap by November 2004, and the problem has not been solved. We must raise or eliminate this cap in order to continue this necessary program.

Instead of rewarding our troops and retirees with tangible benefits, the legislation we are debating today simply permits select Reserve Component members to borrow their own money in the short term at the expense of their long term goal of a comfortable retirement. While H.R. 1779 allows a two year period to replace the withdrawn funds, I am doubtful that a financial strain that would require tapping one's retirement savings would permit complete reimbursement within 2 years. We can do better for the men and women of the world's greatest military. Rather than simply removing the 10 percent penalty for early retirement account withdrawal, I urge my colleagues to support a permanent increase in imminent danger pay and the family separation allowance, provide adequate funding to include reservists in TRICARE, eliminate the SBP widow's tax, and raise or eliminate the MHPI spending cap.

H.R. 1779 is a low cost morale booster for our troops in the field, and I urge its passage today. However, the mere fact that we are considering this measure highlights a bigger and more lasting problem for our troops. Mr. Speaker, I will vote yes on this bill, but I urge my colleagues, especially the Republican Majority to follow up H.R. 1779 with the more meaningful and substantive legislation I have outlined, which is specifically spelled out in the "Military Benefits Proposal," which I am attaching and submitting for the RECORD. This list contains benefits I proposed when the $87 billion Supplemental Appropriation was offered last year. Unfortunately, the Rules Committee did not make my proposal in order as an amendment. I intend to offer many of these benefits again when the Defense Authorization Bill is marked up in Committee and considered here on the floor.

[End Insert]

Military Benefits Proposals

Hostile Fire/Imminent Danger Pay: Makes increase from $225 per month to $250 per month permanent.

Family Separation Allowance: Makes increase to $250 per month permanent.

Hardship Duty Pay: Increases from $300 per month to up to $600 per month during FY2004.

Eliminate Out-of-Pocket Housing Costs: Accelerates from 2005 to 2004 the final year of the bipartisan effort to increase the Basic Allowance for Housing to completely cover average out-of-pocket housing costs for military families living off base.

Family Assistance Centers: Provides $48 million for increased demand on family assistance centers for National Guard and Reserve to assist with problems related to increased deployments.

Transition Assistance for Disabled Servicemembers: Provides $50 million to enhance DOD-VA transition programs for disabled servicemembers.

Deployment Notification to Reservists: Directs DOD to provide maximum advance notice to mobilized Guard and Reserve personnel on the timing and duration of their duty.

Small Business Loans for Reservists: Provides $25 million for loans or loan guarantees for reservists whose small businesses have been disrupted by their mobilization.

Vocation Development for Reservists: Provides $25 million for SBA grants for vocational or technical training for reserve-owned small businesses.

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