Members of the Maryland Association of Certified Public...

Tax questions

March 17, 1998

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: For the first part of last year, I was in the military. Since I left prior to 20 years' service, I am not eligible for a retirement pension. However, I was considered covered by a pension plan during the part of the year I was still in. From Aug. 1 to Dec. 31, I was not covered by a pension plan with my new employer. For the purpose of a deductible IRA contribution, am I or am I not considered covered by an employee plan for the tax year 1997?

A: If you are considered an active participant in a employee plan, you will be subject to IRA deduction limitations. The determination of whether a person is an active participant is made without regard to whether the person's rights in the plan are nonforfeitable. You are deemed to be an active participant in a retirement plan even though you are entitled to benefits only after completing 20 years of military service and you may never receive any military retirement benefits.

Cindie S. Rosenzweig, CPA, Hertzbach & Co.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Call 268-7736 in Anne Arundel County, 836-5028 in Harford County, 848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. You can also submit questions by e-mail through The Sun's Web site:

Selected questions will be answered in the Business section. No questions will be answered personally.

Pub Date: 3/17/98

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