Fred P. Brandkamp, pro se.
David Delduco
, for respondent.
ARMEN, Special Trial Judge
: This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code in effect at the time that the petition was filed.1
The decision to
Petitioner Patricia M. Brandkamp (Mrs. Brandkamp) was employed throughout 1997 by MetLife Insurance Co. (MetLife). Mrs. Brandkamp was hired by MetLife in December 1995 and remained in its employ through November 1998.
At all relevant times, MetLife maintained a defined benefit pension plan (the MetLife plan) that was qualified within the meaning of section 401(a). An individual is eligible to participate in the MetLife plan if the individual: (1) Is at least 21 years old, (2) is an active U.S. salaried or commissioned employee, and (3) has completed 1 year of continuous or credited service.
Once an employee is eligible to participate in the MetLife plan, the employee is automatically enrolled in the plan at no cost to the employee. However, the employee does not have any vested right to a pension benefit until the employee has completed 5 years of continuous or credited service. Mrs. Brandkamp became enrolled in the MetLife plan upon completion of 1 year of service with MetLife in December 1996. However, because Mrs. Brandkamp left the employ of MetLife before completing 5 years of continuous or credited service with MetLife, her right to a pension benefit never vested. On April 13, 1998, Mr. Brandkamp contributed $2,000 to an IRA that he maintained in his name with SouthTrust Bank in Memo. 1992-418, affd. without published opinion 998 F.2d 1018 (8th Cir. 1993).
Because petitioners reported modified AGI in the amount of
$79,300 on their 1997 income tax return, they are not entitled to any IRA deduction if Mrs. Brandkamp was an “active participant” in the MetLife plan at any time during 1997.
Petitioners contend that because Mrs. Brandkamp’s interest in the MetLife plan was forfeitable, Mrs. Brandkamp was not an active participant in the plan. However, section 219(g)(5), which defines the term “active participant”, clearly states that the “determination of whether an individual is an active participant shall be made without regard to whether or not such individual’s rights under a plan * * * are nonfortfeitable.” See also Eanes v. Commissioner , 85 T.C. 168, 170 (1985) (citing Hildebrand v. Commissioner , 683 F.2d 57, 58 (3d Cir. 1982), affg.
, T.C. Memo. 199384. Eanes involves a taxpayer who forfeited all rights under an employer’s retirement plan when he left after only 3 months. Despite the short time the taxpayer worked, we held that he was an active participant in his employer’s plan and was not entitled to a deduction under section 219. Although Eanes involved an history of section 219(g)(7) makes clear that Congress knew that it was changing, and intended to change, the operative law. E.g., H. Conf. Rept. 105-220 at 378-379 (1997), 1997-4 C.B. (Vol. 2) 1471, 1848-1849. The following passage by the Staff of the Joint Comm. on Taxation from the General Explanation of Tax Legislation Enacted in 1997 at 42 (J. Comm. print) also demonstrates this fact:
Present and Prior Law
Under present and prior law, an individual may make deductible contributions to an individual retirement arrangement (“IRA”) up to the lesser of $2,000 or the individual’s compensation if the individual is not an active participant in an employersponsored retirement plan. Under present and prior law, in the case of a married couple, deductible IRA contributions of up to $2,000 can be made for each spouse * * * if the combined compensation of both spouses is at least equal to the contributed amount. Under present and prior law, if the individual (or the individual’s spouse) is an active participant in an employer-sponsored retirement plan, the $2,000 deduction limit is phased out over certain adjusted gross income (“AGI”) levels. Under prior law, the limit was phased out between $40,000 and $50,000 of AGI for married taxpayers filing joint returns * * * . * * * * * * * Reasons for Change The Congress believed it was appropriate to encourage individual saving and that deductible IRAs should be available to more individuals. * * * * * * * * * * Explanation of Provision In general The Act * * * modifies the AGI phase-out limits for an individual who is not an active participant in an employer-sponsored retirement plan but whose spouse is * * * .
* * * * * * * Modification to active participant rule and increase income phase-out ranges for deductible IRAs * * * * * * * The following examples illustrate the income phase-out rules.
Example 1. –-W is an active participant in an employer-sponsored retirement plan, and W’s husband, H, is not. Further assume that the combined AGI of H and W for the year is $200,000. Neither W nor H is entitled to make deductible contributions to an IRA for the year.
Example 2. –-Same as example 1, except that the combined AGI of W and H is $125,000. H can make deductible contributions to an IRA. However, a deductible contribution could not be made for W.
* * * * * * * Effective Date The provisions are effective for taxable years beginning after December 31, 1997.
Although the result that we reach in this case may seem harsh to petitioners, we cannot ignore the plain language of the statute and, in effect, rewrite the statute to achieve what may seem to petitioners to be a more equitable result. See Hildebrand v. Commissioner , 683 F.2d 57, 59 (3d Cir. 1982), affg.
, 661 F.2d 53, 54-55 (5 th Cir. 1981), affg. 74 T.C. 1057 (1980). The statute is unambiguous on this point. Mrs. Brandkamp was an “active participant” in the MetLife plan, and petitioners’ modified AGI exceeded $50,000. Thus, petitioners are not entitled to any 1997 deduction for Mr. Brandkamp’s contribution to his IRA for that year. Respondent’s determination on this matter is therefore sustained.
We have carefully considered remaining arguments made by petitioners for a result contrary to that expressed herein, and, to the extent not discussed above, we consider those arguments to be without merit.
Reviewed and adopted as the report of the Small Tax Case
Division.
In order to give effect to our disposition of the disputed issue, as well as the parties’ concessions, Decision will be entered under Rule 155 .