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"participant's compensation". Such being the case, respondent
contends that the limits of section 415(c)(1) were exceeded, and
the plan and trust were not qualified during the years at issue.
Section 415(c)(3)(A) simply defines participant's
compensation as "the compensation of the participant from the
employer for the year." However, section 402(a)(8) provides:
For purposes of this title, contributions made by an
employer on behalf of an employee to a trust which is a
part of a qualified cash or deferred arrangement (as
defined in section 401(k)(2)) shall not be treated as
distributed or made available to the employee nor as
contributions made to the trust by the employee merely
because the arrangement includes provisions under which
the employee has an election whether the contribution
will be made to the trust or received by the employee
in cash. [Emphasis added.]
Also, section 1.415-2(d)(2)(i), Income Tax Regs.,5 provides that
compensation does not include "Contributions made by the employer
to a plan of deferred compensation to the extent that, before the
application of the section 415 limitations to that plan, the
contributions are not includable in the gross income of the
employee for the taxable year in which contributed."
Furthermore, section 1.401(k)-1(a)(4)(ii), Income Tax Regs.,
provides:
Except as provided in paragraph (f) of this section,
[dealing with the correction of excess contributions]
elective contributions under a qualified cash or
deferred arrangement are treated as employer
5 This provision was renumbered as sec. 1.415-2(d)(3)(i),
Income Tax Regs., effective for years after Jan. 1, 1987. T.D.
8361, 1991-2 C.B. 310, 318.
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