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What is LOSAP

Length of Service Award Program

On January 18, 1998, the “Emergency Services Volunteer Length of Service Award Program was signed into law. This program is more commonly known by the acronym “LOSAP.” The statute defines a LOSAP as “a system established to provide tax-deferred income benefits to active volunteer members of an emergency service organization.” An emergency service organization generally includes all forms of volunteer fire and first aid organizations. For the purposes of administering the law, this definition includes those volunteer first aid organizations that charge for their services. The tax-deferred income benefits for emergency services volunteers come from contributions made solely by the governing body of the municipality or fire district, on behalf of those volunteers who meet the criteria of a plan created by that governing body. The contributions are deposited into a 457(e)(11) plan similar to plans permitted for county and municipal employees. These plans permit the governing body or the volunteer to direct the investment of funds in the different investment vehicles that may be permitted under the plan adopted by the governing body. The investment options may include different types of mutual funds or annuities.

While LOSAP rules may vary state to state, the process in which they originate remains the same.

A LOSAP program is adopted by the governing body of a municipality or fire district of the sponsoring agency. Virtually all emergency service organizations are municipality based entities.

The current tax code provides:

“Length of Service Awards” are for Public Safety volunteers:

The Act stipulates that a bona fide volunteer is eligible to receive an annual award for a qualified year of service. This annual award may be as high as $6,000 adjusted for inflation in $500 increments. If the plan is a Defined Benefit Plan, the limit applies to the actuarial present value of the aggregate amount of Length of Service Awards accruing with respect to any year of service.

Modification of rules applicable to Length of Service Award Programs for bona fide public safety volunteers (sec. 13612 of the Senate aAmendment -page 299; and sec. 457(e)(11) of the code.