- 4 - participant in 1998, she is not entitled to deduct a contribution to an IRA. An active participant is defined by section 219(g)(5) to include an individual who is an active participant in a plan described in section 401(a). Sec. 219(g)(5)(A)(i). Elaborating upon this circular definition, the regulations provide that an individual is an active participant in a profit-sharing plan if, during the taxable year, (1) a forfeiture is allocated to her account, (2) an employer contribution is added to her account, or (3) a mandatory or voluntary contribution is made by the individual to her account. Sec. 1.219-2(d)(1) and (e), Income Tax Regs. Petitioner admits that during the first 5 months of 1998 she was covered by the pension plan offered by her employer. Furthermore, the Form W-2, Wage and Tax Statement, issued to petitioner for that year indicates she made an elective deferral of $1,056.16. Therefore, petitioner was an active participant in her employer’s pension plan. Petitioner argues that she should be allowed to deduct at least half of the IRA contribution for 1998 because she participated in the pension plan for less than half of the year. The law is clear that the restriction on deductions for contributions to IRA’s applies to taxpayers who are active participants for any portion of a taxable year. Sec. 219(g)(1).Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011