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Volunteer Emergency Services Recruitment and Retention Act

Length of Service Award Programs (“service award programs”) providing benefits in the form of deferred payments to volunteers in firefighting and prevention services, emergency medical services and ambulance services have been authorized and established under State law for many years.  Approximately 20 percent of the 800,000 volunteer firefighters in the United States today participate in service award programs. 

While service award programs are similar to traditional pension plans, they are treated differently for tax purposes.  For instance, taxation cannot be deferred in a service award program unlike in a traditional pension plan where employers can set aside funds each year until the employee retires and begins drawing payment.  As a result, service award programs are “unfunded” which leads to insecurity as to whether there will be adequate resources available to pay benefits when due.  Another consequence is that volunteer first responders who leave their department for any reason must begin drawing payment immediately or lose their benefit.

The NVFC has developed legislation that would simplify the requirements for service award programs and reduce the administrative burden of both governmental agencies and potential sponsors by using existing statutory and regulatory schemes.  Under the new legislation, a service award program could be treated as an “eligible deferred compensation plan” if the program sponsor meets certain requirements and elects to do so.  The legislation would not create any new service award programs or require changes to existing service award programs, but simply provide increased flexibility for program sponsors.   While the legislation would allow for deferred taxation of service award programs in some cases, in the long-term the legislation would be revenue neutral.

The LOSAP bill was not enacted in the 111th Congress.  Congressman Peter King Peter King (R-NY) along with nine original co-sponsors reintroduced the bill (H.R. 376) on January 20, 2011.