IRAs Open For Combat Zone Warriors

On May 29, President Bush signed the Heroes Earned Retirement Opportunities (HERO) Act, which will allow service members to contribute to an Individual Retirement Account (IRA) when serving in a combat zone tax exclusion area, while continuing to exclude their military compensation from federal income tax. Enlisted members and warrant officers exclude all military compensation. Commissioned officers exclude up to the maximum enlisted pay plus imminent danger pay for the months they serve in a combat zone tax exclusion area. The HERO Act is retroactive to tax year 2004. Therefore, members who did not make IRA contributions during 2004 or 2005, because they were not eligible due to combat zone tax exclusion, have until May 28, 2009, to make IRA contributions for those years.