(Updated May 1, 2006)
H.R. 1499
Heroes Earned Retirement Opportunities Act
Floor Situation
The House is scheduled to consider H.R. 1499, under suspension of the rules, on
Tuesday, May 9, 2006.
The bill is debatable for 40 minutes, may not be amended, and requires a two-thirds
majority vote for passage.
Summary
The HERO Act would treat tax-free combat
pay as taxable compensation for the purpose of making annual IRA contributions.
The provision is effective for contributions made after December 31, 2003 –
providing our troops with up to $70 million in tax benefits over the next 10
years.
Background
Current law may prohibit troops
from saving in an IRA. Generally, contributions to an Individual Retirement
Account (IRA) are limited to the lesser of $4,000 (in 2006) or the individual’s
taxable compensation. Combat pay is tax-free. As a result, members of the
military who receive combat pay as their only source of compensation are not
allowed to contribute to an IRA (because their taxable compensation is zero).
This current-law rule may limit or prohibit IRA savings for men and women in
uniform.
Legislative History
H.R. 1499 was introduced by Rep. Foxx (NC) on April
6, 2006. The bill was referred to the Ways and Means Committee but was not considered.
On May 23, 2005, the House agreed to H.R. 1499, under suspension of the rules,
and passed the bill, as amended, by a voice vote.
S.601 passed the Senate
with an amendment by Unanimous Consent on November 15, 2005.
For additional information or questions, please contact the Rep. Foxx's office at 5-2071.