May 10, 2006 – The House of Representatives Tuesday, May 9, approved 412-0 the Heros Earned Retirement Opportunities (HERO) Act (H.R. 1499). This bill would allow military personnel serving in combat areas to make IRA contributions from nontaxable combat pay. Generally, nontaxable combat pay has not been eligible for determining earned income upon which IRA contributions may be based.
The Senate unanimously passed H.R. 1499 in November of 2005, after amending it to be effective as of December 15, 2003. Tuesday’s House action included an amendment to make such contributions available as of 2004 tax years, and allow contributions for closed tax years, for a period of three years after the date the legislation may be enacted. It is being determined whether further congressional action is necessary to align what appears to be differing provisions between House and Senate bills. What is clear, however, is that there is complete support for this concept in both houses of Congress.