Level 15

Retirement tax questions

For a 401(k) plan,

The individual is an active participant if the individual elects to defer compensation (make salary deferral contributions) to the plan.  If the individual is eligible to make salary deferral contributions, but declines to make such salary deferral contributions for a year (and no other contributions or forfeitures are allocated to such individual's account for the plan year ending with or within the individual's taxable year), the individual is not an active participant for that year.