WASHINGTON - Legislation is in the works that would require employers to make up missed defined contribution plan payments for veterans who return to work after military service.
The Uniformed Services Employment and Reemployment Rights Act of 1993, H.R. 995, passed in the House in May 1993; the Senate version, S.843, passed in November. A new bill combining the two is expected soon after Congress returns from its recess April 11. Congressional staffers are working to iron out the differences between the two bills.
Both allow veterans to contribute to their defined contribution plans upon returning to the same job they had before serving in the military. Both also require employers to offer certain health care benefits.
The details still are being negotiated by Capitol Hill staffers, but sources said employers most likely would not have to make up earnings and forfeitures, which would include investment income on retroactive contributions.
"We are very, very concerned about the lower-level enlisted people," said a Senate staff member involved with the legislation. "We want to encourage them to make contributions to their (defined contribution plans), and give them a reasonable amount of time to do that."
The House version of the bill required changes to the Internal Revenue Code; the Senate version worked around the code, protecting employers from any tax penalties, or losing tax-qualified status when complying with the bill.
One difference between the House and Senate versions involved investment income that would have been earned while the employee was in the military.
The House bill did not say whether employers should make up investment income, leaving it to the courts to interpret the application of the law. The Senate bill specifically said employers would not be required to make up earnings and forfeitures.
The House version also would require employers with profit-sharing plans to give veterans retroactively, upon returning to work, the same benefits that other employees received during that time. The Senate version did not include this provision.
At press time, no time frame had been set, although the bills are expected to provide a comparable amount of time for employers to make the retroactive contributions.
In general, employers don't object to providing the retroactive benefits, said Lynn Dudley, director of retirement policy for the Association of Private Pension and Welfare Plans, Washington. But they object to providing investment income on those contributions, she said.
The legislation is a reaction to Operation Desert Storm in 1991, during which thousands of reservists were called for active duty. Since then, Congress has been trying to come up with a workable solution for employers to provide benefit protection to employees who left their jobs to serve in the military and then returned to their jobs.
As it stands, the bill probably would not affect Persian Gulf war veterans, but would apply to reservists called for future conflicts.
If enacted, it isn't clear how much employers' costs would increase. Although no comprehensive cost analysis has been done, costs would not be excessive because many veterans may not return to the same jobs they held prior to their military service.
