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Boston, Massachusetts, and not to Mr. Thomson or FAC, which is
located in Newport Beach, California. (Mr. Thomson did not
establish any relationship between MFS and himself or FAC.)
Consequently, we hold that Mr. Thomson was not eligible to serve as
a trustee to the FAC IRA trust.
We next consider the consequences of the distributions out of
individual retirement plans to petitioners and the subsequent
rollover of those distributions to a purported IRA trust with an
unqualified trustee. Respondent asserts that the disqualification
of Mr. Thomson requires such distributions to be included in
petitioners' income. Petitioners assert that so long as they
substantially complied with the statutory rollover contribution
requirements, they are entitled to exclude the distributions from
income. We agree with respondent.
In Fazi v. Commissioner, 102 T.C. 695 (1994), we addressed the
issue of whether the failure to adopt a formal written plan for the
establishment of an employer retirement plan was fatal to the
qualification of the plan, thus causing the distributions from that
plan to be includable in income. (Section 1.401-1(a)(2), Income
Tax Regs., requires a definite written program and arrangement
which is communicated to the employees. See also Employee
Retirement Income Security Act of 1974, Pub. L. 93-406, sec.
102(a)(1), 88 Stat. 829, 841.) We held in Fazi that the regulatory
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