The Senate is considering a bill that would enable military personnel serving in combat zones to use tax-free pay to make deductible contributions to individual retirement accounts.[@@]
The Heroes Retirement Act, H.R. 1499, passed in the House earlier this week by a voice vote.
The bill, introduced by Rep. Sam Johnson, D-Texas, would let military personnel in combat zones use tax-deductible pay to make deductible IRA contributions.
“Crazy as it may seem, right now these men and women come home with more disposable income, yet they are not allowed to save some of it in an IRA,” Johnson said earlier this week on the House floor, according to a written version of his remarks printed in the Congressional Record. “But they can spend it on cars, new clothes and family vacations.”
Rep. Sander Levin, D-Mich., said Democrats were disappointed that there was no provision in the current bill that allow military families to treat combat pay as taxable compensation for purposes of claiming the Earned Income Tax Credit. The current provision in the law is set to expire this year. Levin said adding such a provision would have an even greater impact on military families than the IRA allowance.
“We had hoped that the provision could be included as part of the bill before us today to help military families,” Levin said. “However, we were assured that this will be taken up later this year, and we will continue to press for an extension.”