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(iv) an annuity contract described in section
403(b),
(v) a simplified employee pension (within the
meaning of section 408(k)), or
(vi) any simple retirement account (within the
meaning of section 408(p)), or
(B) who makes deductible contributions to a trust
described in section 501(c)(18).
The determination of whether an individual is an active
participant shall be made without regard to whether or
not such individual’s rights under a plan, trust, or
contract are nonforfeitable. An eligible deferred
compensation plan (within the meaning of section
457(b)) shall not be treated as a plan described in
subparagraph (A)(iii).
In the case of a taxpayer who is an active participant and
who files a joint return, the $2,000 limitation of section
219(b)(1)(A) is reduced using a ratio determined by dividing the
excess of the taxpayers’ modified adjusted gross income (modified
AGI)1 over $40,000, by $10,000. See sec. 219(g)(2) and (3). The
defined benefit plan provided by MPSERS was a plan described in
section 219(g)(5)(A)(i). See Neumeister v. Commissioner, T.C.
Memo. 2000-41, affd. without published opinion 2001-1 USTC par.
50,235, 87 AFTR 2d 2001-819 (6th Cir. 2001). The formula set
forth in section 219(g)(2) and (3) results in a total
disallowance of the IRA deduction where the total modified AGI
reported on a joint return exceeds $50,000. See id. Because
1 As relevant herein, modified adjusted gross income means
adjusted gross income computed without regard to any deduction
for an IRA.
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Last modified: May 25, 2011