John & Christina Wade - Page 5




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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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