5 (v) a simplified employee pension (within the meaning of section 408(k)), or (B) who makes deductible contributions to a trust described in section 501(c)(18). The determination of whether an individual is an active participant shall be made without regard to whether or not such individual's rights under a plan, trust, or contract are nonforfeitable. An eligible deferred compensation plan (within the meaning of section 457(b)) shall not be treated as a plan described in subparagraph (A)(iii). In the case of a taxpayer who files a joint return, the deduction is reduced using a ratio that is a function of the taxpayer's modified adjusted gross income (modified AGI).3 Sec. 219(g)(2) and (3). This provision results in a total disallowance of the IRA deduction where the total modified AGI reported on a joint return exceeds $50,000. See Felber v. Commissioner, T.C. Memo. 1992-418, affd. without published opinion 998 F.2d 1018 (8th Cir. 1993). Petitioner contends that he is entitled to a deduction for his entire IRA contribution because PERS is an eligible deferred compensation plan. Petitioner argues, therefore, that he is not an "active participant" within the meaning of section 219(g)(5). As relevant herein, a deferred compensation plan is defined by section 457 as a plan established and maintained by a State, political subdivision of a State, agency, or instrumentality thereof, or any other nongovernmental organization exempt from 3 As relevant herein, modified adjusted gross income means adjusted gross income computed without regard to any deduction for an IRA.Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011