The Mt. Airy News
WASHINGTON — U.S. Rep. Virginia Foxx, R-N.C. 5th District, joined President George Bush in the Oval Office on Monday as he signed the Heroes Earned Retirement Opportunities (H.E.R.O.) Act into law.
The bill, originally authored by Foxx, amends the IRS Code of 1986 so members of the U.S. armed forces may make Individual Retirement Account contributions based on gross income that includes normally tax-exempt combat duty pay.
“Today, as we pay tribute to those who paid the ultimate sacrifice to preserve our freedoms, we must also keep in our hearts and minds those who are currently in harm’s way,” Foxx stated in a press release. “It is very appropriate that the president signed the H.E.R.O. Act today, because it demonstrates our ongoing commitment to our troops.”
She introduced H.R. 1499 in 2005 after being contacted by a constituent whose son, Spec. Michael Hensley of Clemmons, spent most of 2004 in Iraq. His father was frustrated because his son did not earn enough taxable income to take full advantage of Individual Retirement Accounts. According to the current tax code, combat “hazard pay” is not considered taxable income.
“My constituent, Specialist Hensley, wanted to do the responsible thing by making the maximum allowable contribution to his individual retirement account, but found out that because of the nature of his wages, he would not be able to contribute to his nest egg this year,” Foxx said on the House floor a year ago.
“...Most soldiers serving in ... combat zones are paid in wages designated as military hazard pay. As deployment times have grown longer and longer, many soldiers now serve entire calendar years overseas, making their yearly compensation consist of hazard pay exclusively. These wages are not taxed; nor should they be. However, since this compensation is nontaxable, the wages are not eligible for IRA contributions. This is entirely unfair.
“As we all know, IRAs are an excellent tool for responsible retirement savings, and responsible retirement savings should be encouraged for everyone, but especially for those who take up arms in war zones and fight for our freedom. The men and women defending America in harm's way overseas should not be excluded from fully participating in the important retirement investment opportunity that IRAs provide because of a glitch in our tax code. ...The HERO Act simply designates combat hazard pay earned by a member of the armed forces as eligible for contribution to retirement accounts.”
According to the Joint Committee on Taxation, the act represents a $31-million tax benefit to military families over the next decade. IRA contributions up to $4,000 are tax deductible and contributions from taxable income may be tax-deferred.
Forty-seven members of Congress co-sponsored the bill. In addition, the Military Officers Association of America and the Reserve Officers Association endorsed the legislation. The bill passed the House on a voice vote, with no reported opposition, and passed the Senate by unanimous consent.
“I want to thank Rep. Foxx for not only listening to a problem that many men and women in uniform face, but moving so quickly to introduce a bill to fix it,” the press release quoted Hensley. “On behalf of all soldiers, sailors, airmen and Marines, I thank Virginia Foxx for fighting on our behalf in the United States Congress.”
Foxx has noted that it is unusual for freshman House members to originate legislation that eventually becomes law.
“I am humbled that we have made it this far,” she said, “and am delighted to have helped our soldiers save for their futures.”
The bill was one of two the president signed into law Monday, both dealing with the military.
During a ceremony in Arlington National Cemetery, President Bush also signed the “Respect for America’s Fallen Heroes Act.” It is designed to keep protesters and demonstrators at a distance from military funerals in national cemeteries.
Photo Caption: President Bush signs the Heroes Earned Retirement Opportunities (H.E.R.O.) Act on Monday in the White House. From left are, Sen. John Warner, R-Va., Senate Majority Leader Bill Frist of Tenn., and Rep. Virginia Foxx, R-N.C.
