- 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