- 7 - Colombell was not excluded. Even if she never met the dictionary’s definition of what it would mean to be an “active participant”, the regulations make it clear that she was an active participant in Inova’s retirement plan for the year in issue.6 There are cases that have held that even de minimis participation is sufficient to render a taxpayer an active participant. See, e.g., Wade v. Commissioner, T.C. Memo. 2001- 114 (holding that a mandatory contribution amounting to $84.89 was sufficient to constitute active participation even though the taxpayer was unlikely ever to receive benefits under the plan). Others have held that forfeiting rights to a balance in a qualified plan does not mean that the taxpayer was not an active participant for the year in question. See, e.g., Eanes v. Commissioner, 85 T.C. 168 (1985) (stating that a taxpayer who forfeited all rights under his employer’s retirement plan when he left after only 3 months was still an active participant in the plan and was not entitled to a deduction).7 Here we have a 6 Had Inova’s plan had an earnings threshold rather than an hours-worked threshold, Mrs. Colombell might not have been an active participant. See sec. 1.219-2(b)(1), Income Tax Regs., explaining that an individual is not an active participant if his or her compensation is “less than the minimum amount of compensation needed under the plan to accrue a benefit.” 7 Sec. 219, as applicable to 1981, the taxable year in issue in Eanes v. Commissioner, 85 T.C. 168 (1985), did not include a definition of “active participant”. The flush language currently contained in sec. 219(g)(5), referring to whether the (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011