European Stars And Stripes (Newspaper) - January 12, 1987, Darmstadt, Hesse                                Monday january 12, 1987 the stars and stripes Page 9 87 taxes new restrictions limit Ira plan deductions new York not a big negative in the new tax Law is the two major restrictions put on the lax  of cont bunions to individual retire ment accounts. Starling this year one restrictive area eliminates or limits seductions for an Ira when an individual s adjusted Gross income Csc ends a certain amount. Those amounts arc clearly detailed limited deductibility when such income is higher than $25,000 for singles and j40.000 for married filing jointly and no deductibility when income Levels Are More than $10,000 higher than those threshold Levels. The other area of restrictions is More difficult to comprehend. Regardless of income individuals can not take a tax deduction Tor an Ira if they Are Active participants in an employer maintained retire ment plan. But Lial exactly is an Active participant if you arc in a company plan of any son there s a Strong likelihood that you Are an Active participant said James l. Dorsey publisher of the Ira reporter a Cleveland based newsletter. But de pending on the participation standards of the plan you might not be a  the general Rule is that an employee is an Active participant if the individual is covered by a pension or prom sharing plan. Among the categories of a qua Lincci plans mentioned by the internal Revenue service As fading under this provision Are profit sharing plans tax sheltered annuity arrangements 401 k plans and simplified employee pension plans. A coverage year for an Active participant meets one of two tests either a year in which an employee s company or Union has a retirement plan under which Money is added to the individual s account or a year in which the individual is eligible to earn act Imnel credits an employee does not necessarily have to be fully or partly vested in retirement Bene fits make any contribution to the plan or work for inc employer for a whole year to he considered an Active participant. The Bottom line is. Arc you accruing any Benefit in a plan said Paul Silulu. Vice president of Tow ers Herrin Forster & Crosby an employee benefits consult ing firm. The House and Senate conference committee re port issued before passage of the tax Reform act of 1986 made another key Point an individual is considered an Active participant if the individual is Eligi ble to participate in the plan even if the individual decides not to participate. Thus Art individual May not retain eligibility for an Ira deduction simply by waiving plan participation. Retirees of course Are not Active participants in their companies plans and Are eligible for lax deductible iras if they earn income elsewhere and meet the applicable requirements. And there Are other instances in which workers arc not in the Active participant category. For example most corporate retirement plans exclude employees under age 21 or who have less than a year of service with inc company. In those cases such workers would not be Active participants even though they Are employed by companies with a plan in place. Then there arc the situations in which a married couple files jointly yet Only one spouse is an Active participant in a plan. Nevertheless because of the joint filing the other spouse would lose the right to take a tax deduction for a mounts paid Man Ira. If you file separately however it does t matter if your spouse is an Active participant and you can have a deductible Ira said Richard la Bomhardt. Research actuary for the benefits consulting firm of Milliman & Robertson. Bui thai May be culling your Throat in other ways so that being an Active participant or not May not be As  starting with the w-2 forms for the 1987 lax year thai employees will receive Early next year a Section will indicate whether an individual is an Active participant in a company s plan. But this indication is the employer s opinion and not that of the irs. Certainly an individual is not bound by an incur Eccl designation on the part of an employer said an official of the Revenue service in Washington who requested anonymity. If you think it s incorrect you have an Opportunity 10 explore it with the employer or with the service  anyone who is not sure about eligibility for a lax deductible Ira might make the contribution this year to take advantage of the tax free accumulation on earned income still available to All workers. If you later determine that you were an acl ivc participant you can withdraw those funds before april 15, 1988, at no penalty. The worst that can happen is that you re covered by a retirement plan and you lose the Ira Deduc Tion Shuitz said. You might even want 10 leave the Money in As a non deductible  a revised publication 590 covering Active participation As Well As other important elements of iras under the tax revision program will be available from the irs later his Nanlyn. Ski police hired la a top order in the sometimes Crovak a slopes