The 2006 HERO Act allows military members serving in combat zones to contribute to a Traditional IRA or Roth IRA for military retirement savings, while also taking advantage of the tax-free status of their combat pay.
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Military Pay

Better Retirement Contribution Options

Thanks to the 2006 Heroes Earned Retirement Opportunities (HERO) Act, military members serving in combat zones now may contribute to a Traditional IRA or Roth IRA for military retirement savings, while also taking advantage of the tax-free status of their combat pay.


  • Yearly maximum contributions: The federal limit on annual contributions has been increasing gradually, and is $15,000 in 2006. If you're 50 or older, you may contribute an additional $5,000.
  • Some contributions are deductible
  • Tax-deferred earnings
  • Distributions are generally taxable
  • No income limits
  • Traditional IRA Accounts and Roth IRA Accounts are both insured by the FDIC up to $250,000.
  • The 401(k) gives you an immediate tax break, because contributions come out of your military pay before taxes are withheld.


  • Yearly maximum contributions
  • Non-deductible contributions
  • Tax-deferred earnings
  • Tax-free qualified distributions
  • Eligibility varies depending on income level

With a Roth IRA, you get no immediate tax break, but withdrawals during your military retirement will be tax-free. You can make at least a partial contribution to a Roth IRA if your modified adjusted gross income is less than $110,000, if you're single, or less than $160,000, if you're married and filing jointly.

Aim to build a military retirement nest egg that is 25 times the annual investment income you will need.

While the Roth IRA offers an investment completely tax-free upon withdrawal, you won't get a tax deduction when you contribute to the Roth IRA. Choosing a Roth IRA over a traditional IRA depends on your current situation, and your future outlook.

With a Roth IRA, you can also take certain early distributions without penalty. And since minimum distribution rules don't apply, if you're able to live on other resources after military retirement and you don't draw on your Roth IRA at age 70 1/2, your Roth IRA earnings continue to grow, tax-free.


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