840 CMR 3.00: INTERNAL REVENUE CODE COMPLIANCE PROVISIONS

3.10:  Internal Revenue Code Sections 414(u) and 401(a)(37) and the HEART Act

(1) Effective December 12, 1994, notwithstanding any other provision of retirement system law, contributions, benefits and service credit with respect to qualified military service are governed by Internal Revenue Code Section 414(u) and the Uniformed Services Employment and Reemployment Rights Act of 1994.

(2) [Mandatory Provision]  Effective with respect to deaths occurring on or after January 1, 2007, while a member is performing qualified military service (as defined in chapter 43 of title 38, United States Code), to the extent required by Internal Revenue Code Section 401(a)(37), survivors of a member in a State or local retirement or pension system, are entitled to any additional benefits that the system would provide if the member had resumed employment and then died, such as accelerated vesting or survivor benefits that are contingent on the member's death while employed.  In any event, a deceased member's period of qualified military service must be counted for vesting purposes.

(3) [Optional Provision]  Effective with respect to deaths (for purposes of benefits under Section 12 of Chapter 32) and ordinary disabilities (as determined under Section 6 of Chapter 32) occurring on or after January 1, 2007, while a member is performing qualified military service (as defined in chapter 43 of title 38, United States Code), to the extent permitted by Internal Revenue Code Section 414(u)(9), for benefit accrual purposes and for vesting purposes, (under either section 12 of Chapter 32 or section 6 of Chapter 32)  the member will be treated as having earned years of service for the period of qualified military service, having returned to employment on the day before their death or the day before their application for ordinary disability (as determined under Section 6 of Chapter 32), and then having terminated on the date of death or the date of the application for  ordinary disability (as determined under Section 6 of Chapter 32).  This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner. 

(4) [Mandatory Provision for 415(c) language]  Beginning January 1, 2009, to the extent required by Internal Revenue Code Section 414(u)(12), an individual receiving differential wage payments (as defined under Internal Revenue Code Section 3401(h)(2)) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under Internal Revenue Code Section 415(c).  This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.

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