H.R. 3305: LEO Fair Retirement Act of 2025

The LEO Fair Retirement Act of 2025 is a proposed law aimed at changing how retirement benefits are calculated for certain federal law enforcement officers. Here’s a simplified explanation of what the bill entails:

Purpose of the Bill

The main objective of the bill is to ensure that federal law enforcement officers can receive credit for overtime hours they have worked but for which they were not compensated due to existing pay limitations. This measure is intended to help attract and retain capable law enforcement personnel in light of the demands of national security and public safety.

Key Provisions

• Inclusion of Unpaid Overtime in Retirement Calculations: The bill proposes that any overtime hours worked by law enforcement officers, which were limited in payment under current federal laws (specifically under sections 5545a and 5547), will now be counted towards their retirement annuity calculations.
• Lump-Sum Payment Requirement: To benefit from this change, the officers must make a lump-sum payment to cover the difference between what they actually contributed to their retirement fund and what they would have contributed had they been compensated for the overtime. This payment is assessed based on the difference for the three consecutive years used in their average pay calculation.
• Amendments for Two Retirement Systems: The bill amends two sections of the U.S. Code, specifically for the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS), establishing similar rules for both systems regarding the treatment of overtime pay for retirement calculations.
• Effective Date: The provisions of the bill would apply to any relevant retirement benefits calculated on or after one year from the enactment date of the Act.
• Regulatory Guidance: The bill orders the Office of Personnel Management to establish regulations to implement the changes within one year of the Act being signed into law.

Eligibility for Additional Benefits

The bill clarifies that "covered employees" or law enforcement officers include various positions such as Postal Inspectors, criminal investigators, federal air marshals, and specific security officers. This expanded definition serves to ensure that a broader range of federal law enforcement personnel are able to benefit from these changes.

Tax Credit for Lump-Sum Payments

Additionally, the Act allows for a tax credit for those law enforcement officers who make these lump-sum payments. This tax credit is intended to offset the financial impact of the required payment tied to their retirement compensation calculations.

Regulatory and Procedural Requirements

Regulations set by the Office of Personnel Management will outline procedures for the payments of contributions from officers' Thrift Savings Fund accounts and ensure that payroll information is properly maintained and provided to implement these amendments effectively.

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