[Congressional Record Volume 151, Number 28 (Thursday, March 10, 2005)]
[Senate]
[Page S2495]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CONRAD:
  S. 601. A bill to amend the Internal Revenue Code of 1986 to include 
combat pay in determining an allowable contribution to an individual 
retirement plan; to the Committee on Finance.
  Mr. CONRAD. Mr. President, today I am introducing legislation to 
correct an injustice in the Internal Revenue Code that is negatively 
affecting our troops.
  I recently received an e-mail from an active-duty Airman who 
expressed his dismay that he has been told the law requires him to 
withdraw the money he had contributed to an IRA previously in the year. 
Here is what he told me:

       I am an active-duty member of the military who has been 
     deployed so much that I have not paid taxes for more than a 
     year now. I also had been contributing to a Roth-IRA. I've 
     been told by tax professionals that I will have to withdraw 
     my contributions because I do not show a taxable income. I've 
     been deployed and put in harm's way many times last year and 
     I am not allowed legally to contribute to an IRA like any 
     other average American.
       This is an injustice to the soldiers that work so hard 
     under hard conditions. There are thousands of soldiers that 
     are going to be told to take their IRA contributions out 
     since they have been deployed twelve months. This is a slap 
     in the face for those soldiers who have put themselves in 
     danger.

  This injustice results from an unintended, but undeniably unjust, 
interaction between combat pay and IRA rules. Under IRA contribution 
rules, you can only contribute to a tax-favored retirement account if 
you have taxable income for the year. Military personnel deployed for a 
full calendar year or more, however, may have no taxable income because 
their earnings while serving in a combat zone are excluded from 
taxation. These troops are therefore prohibited by law from 
contributing income to an IRA because, technically, they have not 
earned taxable income.
  This is indeed an injustice. This is no way to treat the men and 
women who have been deployed to combat zones in Iraq and Afghanistan 
for long periods of time. Rather than discouraging our troops from 
saving for retirement, we should take steps to ensure that they have 
the same access to tax-favored retirement savings programs as the rest 
of us.
  I ask my colleagues to join me in correcting this injustice. The bill 
I am introducing today simply amends the Internal Revenue Code to allow 
our dedicated military service men and women to contribute to lRAs, 
regardless of their deployment status.
  My bill presents an opportunity for the United States Senate to 
support retirement savings and our brave military personnel. This is a 
win-win for all involved. I hope my colleagues will join me in 
correcting this injustice and send this bill to the President for his 
quick signature.
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