Rep. Peter King (R-N.Y.) and nine co-sponsors last week reintroduced the Volunteer Emergency Services Recruitment and Retention Act (HR 376), a bill that would clarify the treatment of length of service award programs (LOSAP) in the federal tax code. LOSAPs are pension-like programs for volunteer emergency services personnel, and nearly 20% of the volunteer firefighters in America participate in some form of a LOSAP, according to the National Volunteer Fire Council.

The point of LOSAP is to provide participants with a financial benefit after they reach a certain age and length of service. As with pension plans, LOSAPs should be taxed when a beneficiary begins drawing from it, not each year when a payment is made into the LOSAP account. HR 376 would fix this problem.

Another major change that HR 376 makes is to increase the limit on how much can be contributed into an individual's LOSAP account each year from $3,000 to $5,500. The $3,000 limit was established in 1996 and has not been increased since. The bill also creates a mechanism for adjusting the $5,500 limit based on inflation.

The reintroduced HR 376 also:

• Clarifies that in any given year a LOSAP sponsor can contribute more to a volunteer's LOSAP plan than it pays that individual for volunteering.
• Allows non-governmental LOSAPs to be treated as governmental.