Gordon J. and Bonnie L. Schoof - Page 15

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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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