Guardsmen and Reservists Financial Relief Act of 2004

Guardsmen and Reservists Financial Relief Act of 2004 - Amends the Internal Revenue Code to exempt from the ten percent penalty on premature distributions from tax-exempt retirement plans, distributions to military reservists or national guardsmen ordered or called to active duty for a period in excess of 179 days or for an indefinite period, if such distributions are made during the active duty period. Applies this exemption to individuals ordered or called to active duty after September 11, 2001, and before September 12, 2005.

Applies withholding of tax requirements to differential wage payments. Defines "differential wage payments" as employer payments made to an employee on active duty in the Uniformed Services for more than 30 days representing all or a portion of the wages such employee would have received if performing services for the employer. Treats differential wage payments as compensation for retirement plan purposes.

Allows certain small business employers (having an average of 50 or fewer employees): (1) a general business tax credit for 50 percent of the lesser of actual compensation paid to each Ready Reserve-National Guard employee while on active duty or $30,000 (terminates such credit after 2005); and (2) a work opportunity tax credit for employees hired to replace Ready Reserve-National Guard employees while such employees are on active duty (disqualifies employers who fail to comply with employment or reemployment rights of military reservists).

Directs the Comptroller General to study and report to Congress before July 1, 2005, on: (1) problems in recruiting military reservists; (2) problems in providing differential wage payments to military reservists; and (3) the effectiveness of the Ready Reserve-National Guard employee tax credit as an incentive for the hiring and retention of military reservist employees.

Exempts a qualified disaster-relief distribution from the ten percent penalty on premature distributions from tax-exempt retirement plans. Defines "qualified disaster-relief distribution" as any distribution from a tax-exempt retirement plan to an individual who has sustained a loss in excess of $100 as a result of a major disaster declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Requires such distribution to be made during the one year period after the date of the disaster declaration.