Alert: Active Duty Military Service Brings Expanded Employment Rights Under New HEART Act

On June 17, 2008, President Bush signed the Heroes Earnings Assistance and Relief Tax Act of 2008 (the HEART Act), which expands the requirements under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) and requires employers to provide certain benefits to employees called to active duty, including the following:

  • Individuals who die during qualified military service must be treated as having been actively employed on the date of their death;
  • Differential wages must be included as compensation for purposes of determining benefits under a retirement plan; and
  • Individuals called to active duty for at least 180 days must be permitted to receive distributions from their retirement plans without penalty while on active duty.

Additionally, the HEART Act gives employers the opportunity and flexibility to provide the following benefits to employees called to active duty:

  • Employers may allow individuals who are called to active duty to receive a cash distribution of the balance of the individual’s health flexible spending account;
  • Employers may make certain contributions and provide additional benefit accruals to individuals who die or become disabled during qualified military service; and
  • Recipients of military death benefit gratuities may rollover the amounts received, tax-free, to a Roth IRA or one or more education savings accounts.

Although certain provisions of the HEART Act are effective immediately, employee welfare benefit and pension plans must be amended to comply with all of the provisions of the HEART Act on or before the 2010 plan year.

Should you have questions regarding the HEART Act, or other employment related issues arising for employers under USERRA, please contact David Paxton at 540.983.9334 or any of the members of the Labor & Employment or Employee Benefits teams at Gentry Locke.

Please note: This page is provided for informational purposes only and is a marketing publication of Gentry Locke Rakes & Moore, LLP. It is intended to alert visitors to developments in the law and is does not constitute legal advice or a legal opinion on any specific facts or circumstances. The contents are intended as general information only. You are urged to consult your own lawyer concerning your situation and specific legal questions you may have.

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