History of Legislation

History of the LOSAP

Length of Service Award Programs has been around since the 1960s.  Some States have state-level programs while other States allow fire departments to implement their own, local, independent program.  Currently there are 21 States where a LOSAP program has been established at the State or Local level.  LOSAP programs are established under IRC Section 457(e)(11)(A)(ii) and allow contributions up to $7,000 in 2023 and $7,500 for 2024 for each individual participant.  There are two different types of LOSAP programs:

A Defined Contribution Plan where contributions are added to the individuals account and when the participant attains the vesting requirements the funds are available for retirement benefits

A Defined Benefit plan where funds are added to the plan and when a participant reaches “entitlement age” they become eligible to receive a set dollar amount every month as a pension.  

LOSAP in Maine

In April of 2003, the Maine Fire Services Commission commissioned an actuarial study of the need for a Length of Service Award Program for the State of Maine.  The study outlined the feasibility of a program for the State of Maine and gave some recommendations for the implementation of this retirement program for Firefighters in the State of Maine. 

In the 127th legislative session LD 164 was passed to establish the Length of Service Award Program at the State level.  The program was designed to be a defined contribution plan where participants get contributions to their account on an annual basis. The Legislation approved five different funding sources for the program. 

  1. Federal Contributions into participants accounts
  2. State Contributions based on the point system established by the LOSAP Board  
  3. From a municipal fire department or fire company volunteer organization associated with a municipal fire department.
  4. Contributions from municipalities based on service requirements
  5. Salary deferrals from firefighters wages (Currently this is not permitted under federal law)

In July 2017, the seven-member LOSAP Board met for the first time after all members had been appointed by Governor LePage.  Since their initial meeting the Board has been working on writing their Bylaws, approving a formula for awarding service credit/vesting, producing an RFP for administrative services to assist the Board with the implementation and establishing the retirement plan.  They have adopted Bylaws, established the formula for receiving service credit and are currently in the process of selecting a firm to help administer the program for the State of Maine.

In the first legislative session under the 129th Legislature LD 1014 was submitted to fund the estimated $2.5 Million cost of the program. Those funds would establish the plan under section 457 of the Internal Revenue Code, fund the Third Party Administrator and allow for sufficient funds to contribute funds to participants according to their service credit award. In Governor Mills first State of the State address she added $1.5 Million in funds to her supplemental budget in January 2020. Unfortunately because of COVID the funds were left on the Appropriations Table when the State shut down. With the beginning of the 130th legislative session another bill was submitted to secure the $2.5 Million in funds to operate the program. In Governor Mills Budget for the 2021/2022 fiscal year she added $500,000 in seed money to start the program and another $1.5 Million in funds is now being added to the budget for the 2022/2023 fiscal year.