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Petitioner failed to make a section 402(a)(5)(A) rollover of
the $4,822 distribution, either to an IRA or any other type of
eligible retirement plan. Furthermore, merely being a
participant in another qualified retirement plan does not, in and
of itself, constitute a rollover into such plan of a distribution
from a separate qualified retirement plan. Consequently, the
Court holds that the $4,822 distribution from the retirement plan
at the convention center was not "transferred" to an "eligible
retirement plan" as required by section 402(a)(5)(A) in order for
such distribution to be excluded from petitioner's gross income.
Finally, section 72(a) contains the general rule for
annuities, and section 72(e) contains the rule for payments that
are not received as an annuity (i.e., petitioner's $4,822
distribution). Under section 72(e)(5)(A), amounts received from
qualified plans under section 401(a) are included in gross income
only to the extent that the amounts received exceed the
distributee's "investment in the contract". Section 72(e)(6)
defines generally "investment in the contract" as being the
consideration paid for the contract less amounts received under
the contract before the distribution that are excludable from
gross income. Thus, any nondeductible contributions a taxpayer
has made to a retirement plan are excluded from gross income when
such distributions are made. Petitioner presented no evidence to
establish that he made any nondeductible contributions to the
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Last modified: May 25, 2011