Small employers who pay wage differentials to employees on active duty in the National Guard and Reserves would receive a tax credit, under H.R. 6081, the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008, which recently passed in the Senate and House of Representatives.
The legislation, which is expected to be signed by President Bush, also would treat differential wages of active-duty employees as wages for withholding and retirement plan purposes, according to a statement from the House Ways and Means Committee.
Among other things, the HEART Act would modify the Uniformed Services Employment and Re-employment Rights Act (USERRA) to allow an employer to make certain contributions to a qualified pension plan on behalf of an employee killed or disabled during combat, the committee reports. Active-duty reservists also would be able to make penalty-free withdrawals from retirement plans--an expiring provision that would become permanent--as well as from flexible spending accounts.