The exclusion of up to $5,000 for death benefits no longer applies. It had applied only for employees who died before August 21, 1996. Only a death gratuity paid to a survivor of a member of the Armed Forces continues to be excludable from gross income.
Test for determining deductibility of IRA deductions. Active participants in employer retirement plans are subject to IRA deduction phase-out rules if adjusted gross income exceeds certain threshold.