- 7 -
was precluded from rolling over the distribution to an IRA.5
Another reason advanced by petitioner is that, because he was
covered by a qualified plan at K-Mart, this also precluded his
entitlement to a rollover of the distribution from his former
employer, the convention center. Petitioner appears to further
contend that, by virtue of his being a participant in the K-Mart
plan, such participation constituted a rollover of the convention
center distribution without an actual transfer of the
distribution to the K-Mart plan.
Section 402(a)(1) provides that "the amount actually
distributed to any distributee by any employees' trust described
in section 401(a) * * * shall be taxable to him, in the year in
which so distributed, under section 72 (relating to annuities)."
However, an exception to this general rule is found in section
402(a)(5)(A), which provides:
5 Petitioner apparently is confused by the fact that, sec.
219 allows as a deduction for a contribution to an IRA for any
taxable year an amount not to exceed the lesser of $2,000 or the
amount of the compensation includable in the individual's gross
income for such taxable year. Sec. 219(d)(2) provides that a
qualifying rollover to an IRA (including, but not limited to,
those described in sec. 402(a)(5)) is not deductible as a
"qualified retirement contribution" under sec. 219(a). Moreover,
a qualifying rollover to an IRA is not included in the
calculation of an "excess contribution" to which an excise tax
applies under sec. 4973(a). Sec. 4973(b)(1)(A). Consequently, a
qualified rollover is not includable in gross income (as
explained hereafter in the main text), nor deductible against
gross income, nor subjected to an excise tax in the year of the
rollover (i.e., a "wash" transaction for tax purposes).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011