Legislators across the country introduced a bill on June 25, that would extend the time period for family members of a military service member to make financial decisions after they die.
“This is the first step to extending the decision timeline for the family so they can make the right decisions going forward,” Michigan Representative Jack Bergman said.
The bill was introduced by Bergman and Representatives Mike Thompson, Greg Steube, and Juan Vargas.
The act is the Granting Rollover Access and Contribution Extensions (GRACE) for Military Survivors Act. The legislation would extend the period that gratuities and insurance need to be transferred to Roth IRA and Coverdell education savings account, which is used to pay for education expenses, without tax penalties from one year to three years.
This would include:
- Military death gratuities, a program that provides military family members a tax-free payment of $100,000 from the Department of Defense when their loved one dies
- Service Members’ Group Life insurance (SGLI), a type of insurance
“This does not create a new benefit, it is not going to cost the American taxpayer anymore money,” Bergman said. “It just gives a grace period, hence the name, for those survivors.”
Vargas wrote in a press release that this would give family members breathing room to grieve.
The bill was developed with the organization Gold Star Spouses of America. The National President of the organization, Tamra Sipes said in a press release that oftentimes, family members are advised not to make any financial decisions during the first year after the death of a loved one.
“Extending the contribution period from one year to three years acknowledges the realities of grief and gives surviving families the time they need to make thoughtful financial decisions that strengthen their long-term financial security,” Sipes said.
Bergman says the bill will have to go through several committees.
