DEFINITION of 'Heroes Earned Retirement Opportunities Act - HERO'

Legislation passed by Congress on May 18, 2006, that allows tax-free combat-related compensation received by military personnel to be considered taxable income for IRA contribution purposes. Military personnel also will be able to make IRA contributions based on combat pay earned from January 2004 to May 2006 - up to two years before the act became law.

BREAKING DOWN 'Heroes Earned Retirement Opportunities Act - HERO'

Previous to the act's creation, military personnel who primarily received combat pay as their main source of compensation would not be able to contribute to an IRA. Because combat pay is not considered taxable and IRA regulations stipulate that the maximum IRA contribution is the lesser of either $4,000 or the amount of taxable income received, the maximum contribution allowed was effectively zero dollars.

RELATED TERMS
  1. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  2. IRS Publication 590: Individual ...

    A document published by the Internal Revenue Service (IRS) that ...
  3. Military Clause

    A clause found in most residential leases that permits military ...
  4. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  5. Roth IRA

    A Roth IRA is an individual retirement plan that bears many similarities ...
  6. Combat Zone

    An area designated as a war zone during a specified period. Members ...
Related Articles
  1. Retirement

    IRA Contributions: Eligibility And Deadlines

    Use this checklist for contribution requirements to make your payments on time.
  2. Retirement

    Roth IRA Contribution Rules: The Basics

    What you need to know about Roth IRA contributions – from eligibility to dollar limits, deadlines to tax breaks.
  3. Retirement

    Traditional or Roth IRA: What's the Difference?

    Traditional IRAs and Roth IRAs have similarities and differences investors need to know.
  4. Retirement

    Which Is Better, a Traditional IRA or Roth IRA?

    Traditional IRAs and Roth IRAs have different benefits, but both are great for retirement savings.
  5. Financial Advisor

    7 Top IRA Strategies for Your Clients

    With IRA season in full swing, advisors should consider these seven strategies for clients.
  6. Retirement

    How To Correct Ineligible (Excess) IRA Contributions

    Eager to save for retirement? Learn how to avoid overpayment penalties.
Hot Definitions
  1. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that ...
  2. Taxes

    An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government ...
  3. Impaired Asset

    A company's asset that is worth less on the market than the value listed on the company's balance sheet. This will result ...
  4. Solvency Ratio

    One of many ratios used to measure a company's ability to meet long-term obligations. The solvency ratio measures the size ...
  5. Inelastic

    An economic term used to describe the situation in which the quantity of a good or service is unaffected when the price of ...
  6. Factors Of Production

    An economic term to describe the inputs that are used in the production of goods or services in the attempt to make an economic ...
Trading Center