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contribution to an IRA for the year in issue but argues that
petitioner is prohibited from deducting any of that amount during
the year in issue. Specifically, respondent contends that
petitioner was an “active participant” in an employer sponsored
retirement plan as that term is defined in section 219(g)(5)(A).
Petitioner maintains that he is entitled to deduct
contributions to his IRA because he was not eligible to
participate in CDI’s retirement plan. Petitioner also maintains
that because his rights in the retirement plan had not vested
when his employment terminated, he should not be precluded from
deducting his $2,000 IRA contribution.
Discussion
Section 219(a) generally allows a taxpayer to deduct the
amount contributed to an IRA. The deduction in a taxable year,
however, may not exceed the lesser of $2,000 or an amount equal
to the compensation includable in the taxpayer’s gross income for
the year. See sec. 219(b)(1). The amount of the deduction may
be limited further for a taxpayer who is an “active participant”
in a qualified plan under section 401(a). See sec. 219(g)(1),
(5)(A)(i).
An individual is an active participant in a qualified plan
if, for any part of the year, he is eligible to participate in
the plan and makes voluntary or mandatory contributions to the
plan. See sec. 219(g); secs. 1.219-1(c)(2), 1.219-2(b)(1), (e),
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Last modified: May 25, 2011