text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Volunteer Emergency Services 
  Recruitment and Retention Act of 2006''.
  
  SEC. 2. ELECTIVE TREATMENT OF LENGTH OF SERVICE AWARD PROGRAMS AS 
                ELIGIBLE DEFERRED COMPENSATION PLANS.
  
      (a) In General.--Section 457(e) of the Internal Revenue Code of 
  1986 (relating to other definitions and special rules) is amended by 
  adding at the end the following new paragraph:
              ``(19) Special rules applicable to length of service award 
          plans.--
                      ``(A) In general.--The term `eligible deferred 
                  compensation plan' shall include, at the election of 
                  its sponsor, any length of service award plan. Any such 
                  election shall be irrevocable. In the case of a length 
                  of service award plan whose sponsor has elected to have 
                  such plan treated as an eligible deferred compensation 
                  plan, such plan shall be administered in a manner 
                  consistent with the requirements of this section and 
                  such sponsor shall be treated as an eligible employer 
                  described in paragraph (1)(A).
                      ``(B) Length of service award plan.--For purposes 
                  of this paragraph--
                              ``(i) In general.--The term `length of 
                          service award plan' means any plan paying 
                          solely length of service awards to bona fide 
                          volunteers (or their beneficiaries) on account 
                          of qualified services performed by such 
                          volunteers.
                              ``(ii) Bona fide volunteer.--An individual 
                          shall be treated as a bona fide volunteer if 
                          the only compensation received by such 
                          individual for performing qualified services is 
                          in the form of--
                                      ``(I) reimbursement for (or a 
                                  reasonable allowance for) reasonable 
                                  expenses incurred in the performance of 
                                  such services, or
                                      ``(II) reasonable benefits 
                                  (including length of service awards), 
                                  and fees for such services, customarily 
                                  paid by eligible employers in 
                                  connection with the performance of such 
                                  services by volunteers.
                              ``(iii) Qualified services.--The term 
                          `qualified services' means fire fighting and 
                          prevention services, emergency medical 
                          services, ambulance services, and emergency 
                          rescue services.
                      ``(C) Maximum deferral amount.--In the case of a 
                  length of service award plan whose sponsor has elected 
                  to have such plan treated as an eligible deferred 
                  compensation plan, subsection (b)(2) shall be applied 
                  by striking `the lesser of--' and all that follows and 
                  inserting `the applicable dollar amount,'.
                      ``(D) Distribution requirements.--In the case of a 
                  length of service award plan whose sponsor has elected 
                  to have such plan treated as an eligible deferred 
                  compensation plan, subsection (d)(1)(A)(ii) shall be 
                  applied by deeming a severance from employment to have 
                  occurred at the later of--
                              ``(i) the payment date under the terms of 
                          the plan, or
                              ``(ii) the date on which the plan 
                          participant ceases to perform qualified 
                          services.
                      ``(E) Limitation on accruals.--
                              ``(i) In general.--In the case of a length 
                          of service award plan that is a defined benefit 
                          plan (as defined in section 414(j)) whose 
                          sponsor has not elected to have such plan 
                          treated as an eligible deferred compensation 
                          plan, such plan shall be treated as not 
                          providing for the deferral of compensation if 
                          the aggregate amount of length of service 
                          awards accruing with respect to any year of 
                          service for any bona fide volunteer does not 
                          exceed $5,000. In the case of a length of 
                          service award plan described in the preceding 
                          sentence that is a defined benefit plan (as 
                          defined in section 414(j)), the limitation on 
                          the annual deferral shall apply to the 
                          actuarial present value of the aggregate amount 
                          of length of service awards accruing with 
                          respect to any year of service. Such actuarial 
                          present value shall be calculated using 
                          reasonable actuarial assumptions and methods 
                          assuming payment shall be made under the most 
                          valuable form of payment of the length of 
                          service award under the program with payment 
                          commencing at the later of the earliest age at 
                          which unreduced benefits are payable under the 
                          program or the participant's current age.
                              ``(ii) Cost-of-living adjustment.--In the 
                          case of taxable years beginning after December 
                          31, 2007, the Secretary shall adjust the $5,000 
                          amount under clause (i) at the same time and in 
                          the same manner as under section 415(d), except 
                          that the base period shall be the calendar 
                          quarter beginning July 1, 2006, and any 
                          increase under this paragraph that is not a 
                          multiple of $500 shall be rounded to the next 
                          lowest multiple of $500.''.
      (b) Conforming Amendments.--
              (1) Section 457(e)(11) of the Internal Revenue Code of 1986 
          is amended to read as follows:
              ``(11) Certain plans excluded.--Any bona fide vacation 
          leave, sick leave, compensatory time, severance pay, disability 
          pay, or death benefit plan shall be treated as not providing 
          for the deferral of compensation.''.
              (2) Section 3121(a)(5)(I) is amended by striking ``section 
          457(e)(11)(A)(ii)'' and inserting ``section 457(e)(19)''.
      (c) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 2006.
  
  SEC. 3. EXEMPTION OF LENGTH OF SERVICE AWARD PROGRAMS FROM THE EMPLOYEE 
                RETIREMENT INCOME SECURITY ACT OF 1974.
  
      The Secretary of Labor shall issue guidance clarifying that a 
  length of service award program described in section 457(e)(19) of the 
  Internal Revenue Code of 1986 is not an employee pension benefit plan 
  under section 3(2) of the Employee Retirement Income Security Act of 
  1974 (29 U.S.C. 1002(2)).
target: Volunteer Emergency Services Recruitment and Retention Act of 2006 - Amends the Internal Revenue Code to allow sponsors of certain deferred compensation plans to elect to include length of service award plans for bona fide volunteers providing fire fighting and prevention services, emergency medical services, and emergency rescue services.
  
  Directs the Secretary of Labor to issue regulations exempting a length of service award program from treatment as an employee pension benefit plan under the Employee Retirement Income Security Act of 1974 (ERISA).
feat_title: To amend the Internal Revenue Code of 1986 to provide recruitment and retention incentives for volunteer emergency service workers.