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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...)
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Last modified: May 25, 2011