Heroes Earned Retirement Opportunities Act - HERO


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.

  1. Income

    Money that an individual or business receives in exchange for ...
  2. Work Opportunity Tax Credit

    A separate, nonrefundable credit that is part of the general ...
  3. Income Tax

    A tax that governments impose on financial income generated by ...
  4. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  5. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  6. Taxable Income

    The amount of income that is used to calculate an individual's ...
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  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Who can make catch-up contributions?

    Most common retirement plans such as 401(k) and 403(b) plans, as well as individual retirement accounts (IRAs) allow you ... Read Full Answer >>
  3. Can you have both a 401(k) and an IRA?

    Investors can have both a 401(k) and an individual retirement account (IRA) at the same time, and it is quite common to have ... Read Full Answer >>
  4. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  5. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  6. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>

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