Roblene, Inc. - Page 8




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               Section 415(c)(2) provides that "annual addition" means the            
          sum for any year of--:                                                      
                    (A) employer contributions,                                       
                    (B) the lesser of--                                               
                         (i) the amount of the employee contributions in              
                         excess of 6 percent of his compensation, or                  
                         (ii) one-half of the employee contributions,[4]              
                         and                                                          
                    (C) forfeitures.                                                  
               The dispute in this case focuses on whether amounts                    
          contributed to the trust and allocated to the accounts of Robert            
          and Charlene Peers exceeded the section 415 limitations.  The               
          parties disagree as to what constitutes "participant's                      
          compensation" for purposes of section 415 and as to whether                 
          elective salary deferrals constitute employee or employer                   
          contributions.                                                              
               Petitioner asserts that the commissions it paid Robert and             
          Charlene Peers as independent contractors constitute                        
          "participant's compensation" for purposes of section 415.                   
          Petitioner also asserts that the amounts of elective salary                 
          deferrals are employee contributions and should be included in              
          "participant's compensation."  Thus, petitioner maintains that              
          the limitations of section 415(c)(1) have not been exceeded with            



               4Sec. 415(c)(2)(B) was amended by the TRA 1986 sec.                    
          1106(e)(1), 1106(i), 100 Stat. 2424, 2425, for the years                    
          beginning after Dec. 31, 1986, to include the entire employee               
          contribution in the computation of the annual addition.                     




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