More and more Ohioans are leaving their families, homes and jobs as they are called up for active military duty, and employers need to be aware of their subsequent responsibilities and obligations.
In response to the calling up of reservists, as opposed to initiating a draft, Congress passed the Uniformed Services Employment and Re-employment Rights Act (USERRA), a law that safeguards those employees’ jobs, and their health care and retirement benefits.
“The law was enacted after the Gulf War in 1994 to help the reservists,” says Scott McHenry, an actuary with Moskal Klein. “There was an older 1940 Soldiers and Sailors Act, but USERRA is much more broad.”
Basically, USERRA ensures that employees who have been called to active duty are entitled by law to re-employment and continuation of benefits when proper notice is given by the employee. It applies to all branches of the military and to all businesses.
“With many laws, there are different standards for small and large employers, but this is a blanket ruling,” says McHenry.
USERRA also details options for employees in regard to their retirement plans.
“As far as pensions, retirement and vesting go, for the period that (the employees) are gone, they must be treated as if they had been employed,” says McHenry.
Employees — by law and without IRS penalties — are allowed to make up all retirement plan contributions if they return within five years of their deployment. Plan eligibility is not affected by an employee’s time away during military service.
“Pension and vesting for the period that you are gone must be treated like you were employed,” says McHenry.
If the vesting period is five years, and in one or more of those years an employee is away, he or she is still vested five years from the plan participation start date.
Any make-up contributions can be ignored in the nondiscrimination testing employers are required to do. Make-up contributions are also not taken into account for determining deferral limits, deduction or plan limits. However, those year’s limits do apply for the make-up contributions.
“From the date of the rehire, the contributions must be made by the same period of the military service times three,” he says.
Contributions can be made at any point during that time period, but may not exceed five years from the date of re-employment. How to reach: Moskal Klein Inc., (216) 771-4242.
