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Under the
"Heroes Earned Retirement Opportunities (HERO) Act (H.R. 1499)", signed
into law on May 29, 2006 (Memorial Day), members of the military serving in Iraq, Afghanistan
and other combat zone localities can now count tax-free combat pay when
determining whether they qualify to contribute to either a Roth or
traditional IRA. Before this change, members of the military whose
earnings came entirely from tax-free combat pay were generally barred
from using IRAs to save for retirement.
The HERO Act allows military personnel who received tax-free combat pay
in either year 2004 or 2005 to go back and make IRA contributions for
those years. Eligible military members will have extra time, until May
28, 2009, to make these special back-year contributions.
For those under the age of 50, the IRA contribution limit was $3,000 for
2004 and $4,000 for 2005. For those 50 and over, the limit was $3,500
for 2004 and $4,500 for 2005.
View the Entire Act (Tax Bill)
Passed By U.S. Congress
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