[Congressional Record Volume 152, Number 43 (Thursday, April 6, 2006)]
[Senate]
[Pages S3235-S3236]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself and Mr. Kerry):
  S. 2585. A bill to amend the Internal Revenue Code of 1986 to permit 
military death gratuities to be contributed to certain tax-favored 
accounts; to the Committee on Finance.
  Mr. SMITH. America's service men and women continue to make the 
ultimate sacrifices for our Nation. In the tragic cases where brave 
soldiers, marines, airmen, and sailors lose their lives in support of 
Operation Enduring Freedom or Operation Iraqi Freedom, we must honor 
their service by ensuring that their families are not forced to 
shoulder undue financial strain. Therefore, I am honored to introduce 
the Fallen Heroes Family Savings Act.
  This legislation will increase the flexibility given to families 
while managing the death gratuity payment to the survivors of fallen 
service men and women. This bill will provide these families expanded 
financial options to invest the $100,000 death gratuity payment in 
health, education, and retirement savings accounts. Allowing families 
to transfer these funds will help them save money for a college 
education, medical expenses, or to finance a future retirement.
  Allowing military families increased financial flexibility is the 
least we can do to honor the legacy our troops have worked so hard to 
create. It is my hope that this legislation will assist the

[[Page S3236]]

families of fallen service men and women in their time of grief and 
allow them to plan for their future.
  I ask for unanimous consent to have printed in the Record the 
following letter from the Military Officers Association of America in 
support of this legislation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                     Military Officers Association


                                                   of America,

                                    Alexandria, VA, April 6, 2006.
     Hon. Gordon Smith,
     U.S. Senate,
     Washington, DC.
       Dear Senator Smith: I am writing on behalf of the 360,000 
     members of the Military Officers Association of America 
     (MOAA) in support of your planned legislation, the Fallen 
     Heroes Family Savings Act. This important bill would help 
     military survivors manage the increased death gratuity 
     amounts permanently authorized in the FY2006 National Defense 
     Authorization Act.
       The new $100,000 death gratuity provides greatly improved 
     compensation for military survivors and their families but 
     also presents a challenge as to where to safely invest such 
     sizeable sums to provide for future financial security. Your 
     bill would allow survivors to invest death gratuity lump sums 
     in Roth IRA's and other savings accounts, above the 
     contribution limits now allowed. This makes perfect sense and 
     is a logical extension of efforts to increase benefits to 
     widows.
       MOAA is grateful for your leadership on this and other 
     issues important to our servicemembers. We pledge our support 
     in seeking enactment of this important legislation.
           Sincerely,
                                                   Norb Ryan, Jr.,
                                                        President.

  Mr. KERRY. Mr. President, today Senator Smith and I are introducing 
``The Fallen Heroes Family Savings Act'' that will help military 
families that have suffered a tragic loss. In recent years, the 
Congress has generously raised the amount of the military death 
gratuity to $100,000 and expanded eligibility to all in uniform.
  Our current tax laws do not allow the recipients of this payment to 
use it to make contributions to tax-preferred accounts that help with 
saving for retirement, health care, or the cost of education. Our 
legislation would allow families who already have given so much to 
contribute the death gratuity to certain tax-preferred accounts. These 
contributions would be treated as qualified rollovers. The contribution 
limits of these accounts will not be applied to these contributions.
  This legislation will not ease the pain of military families that 
suffer the loss of a loved one, but it can help families put their 
lives back together. It will enable military families to save more for 
retirement, education, and health care by being able to put the death 
gratuity payment in an account in which the earnings will accumulate 
tax-free.
  These changes to our tax laws will help military families with some 
of their financial burdens. It can not repay the sacrifices that they 
have made for us, but it hopefully demonstrates the gratitude of a 
Nation that will not forget the families of the fallen.
                                 ______