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H.R. 9489: GRACE for Military Survivors Act

This bill would give families of certain deceased service members more time to put military death benefits into tax-advantaged savings accounts.

What changes

Under current law, some military death benefits can be rolled into a Roth IRA or a Coverdell education savings account only if the contribution is made within 1 year of receiving the benefit. This bill would extend that deadline to 3 years.

Who would be affected

The change would apply to contributions made from military death benefit payments received under the relevant federal laws governing survivor benefits. In practical terms, this means eligible survivors would have a longer window to decide whether to place those funds into one of these accounts.

How the bill would work

It changes the tax code’s contribution deadline from 1 year to 3 years for these specific benefit-related deposits.
It would generally apply to qualifying benefit payments received on or after the bill becomes law.
It would also apply retroactively to certain benefit payments received going back to October 7, 2001, if the contribution is made by the later of:
- 3 years after the benefit was received, or
- 1 year after the bill is enacted.

Practical effect

The main effect is to give survivors more time to make tax planning and education savings decisions after receiving military death benefits. It does not change the amount of the benefit itself; it only changes the time allowed to contribute those funds to the specified accounts.