Uniformed Services Employment and Reemployment Rights Act

USERRA requires pension plans to be operated in compliance with its provisions beginning on October 13, 1996. The Act confers certain rights on employees who return to employment after an honorable discharge from service in the United States uniformed services, including the United States Armed Forces, Army and Air National Guard and the commissioned corps of the Public Health Service. Virtually all periods of such service are covered, whether voluntary or involuntary. With some exceptions, the period of uniformed service must be five or fewer years, and the time within which the employee must notify the employer of his or her intent to return to employment varies from one to 14 to 90 days depending upon the period of uniformed service.

An employee who returns from uniformed service within the required time may not be treated as having a break in service with respect to the period of uniformed service. Among other things, this means the employee must immediately become a participant in the tax-qualified pension and profit sharing plans in which he or she participated before the uniformed service. More importantly, the period of uniformed service must be counted for purposes of vesting and benefit accrual under the employer's pension or profit sharing plans. Under a defined benefit plan this means granting the employee a period of benefit accrual service for the period of uniformed service and funding for that accrued benefit, and under a defined contribution plan the employer must make an additional contribution to the employee's account with respect to the period of uniformed service. Benefit accruals or allocations of contributions are to be calculated on the pay the employee would have earned but for the period of uniformed service, or, if that amount is not reasonably certain, then the average pay of the employee over the twelve months (or shorter period of service) preceding the period of uniformed service. The employee is not entitled to any retroactive credit for earnings or allocations of forfeitures on contributions made with respect to a period of uniformed service. To reiterate, an employee becomes entitled to the USSERA pension rights only upon the employee's return to employment. The employer is not required to fund for benefits until the employee actually returns from uniformed service.

A returning employee whose rights are protected under USSERA may make up contributions which are permitted or required under the employer's pension plans. Make-up contributions must be deposited within a period which is three times the duration of the employee's uniformed service, but not more than five years. Upon making the contribution the employee becomes entitled to any employer contributions which are contingent on the employee's contribution.

For purpose of applying the limitations on contributions to tax-qualified plans, employee and employer contributions are deemed to have been made during the period of uniformed service to which they relate, not the period during which they are actually contributed.

Employers also may (but are not required to) amend their plans to suspend the repayment of participant loans during a period of uniformed service.