Susan Muffley Act of 2025

Increased Monthly Benefits: Eligible participants and beneficiaries will see their monthly benefits increased to match their full vested plan benefit (Section 2(a)(1)(A)).

Lump-Sum Back Pay: The bill provides for lump-sum payments to eligible participants and beneficiaries to cover the difference between what they were paid and their full vested benefits (Section 2(a)(2)(B)).

Interest Compensation: To make up for lost time, the lump-sum payments will be increased to account for foregone interest at a 6 percent annual interest rate (Section 2(a)(2)(B)).

Special Treatment for Surviving Spouses: Surviving spouses of eligible participants can elect to have the lump-sum payments included in their own gross income rather than the deceased participant's income (Section 2(d)(2)(B)).

Taxation of Lump-Sum Payments: Unless a taxpayer makes a specific election, the lump-sum payments will be included in their gross income and spread out over a three-year period (Section 2(d)(1)).

Income Inclusion Upon Death: If a taxpayer dies before the three-year period for spreading out income is complete, any remaining amount must be included in the gross income for that taxable year (Section 2(d)(2)(A)).