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Morrissey essentially used the Defined Benefit Plan as a
checking account, on which interest accumulated tax free, and not
as a retirement vehicle. From February 8, 1984, through December
9, 1988, Morrissey, as trustee of the Defined Benefit Plan, made
a series of six loans from the Defined Benefit Plan assets to
himself, for a total of $105,000. The Forms 5500 for the plan
years ended October 31, 1989 and 1990, report loans as of the
beginning of each plan year of $129,031 and $152,112,
respectively. The six notes all fail to state when payments are
due or when repayments should be made. Furthermore, none of the
six installment notes require Morrissey to provide security or
collateral for the loans. Additionally, none of the installment
notes state maturity dates.
It is clear from examining the activity in the Trust account
at the Bank of New York that Morrissey was using the Defined
Benefit Plan as a checking account for his personal needs rather
than as a retirement plan for the exclusive benefit of
petitioner's employees and beneficiaries. From February 8, 1984,
through December 9, 1988, Morrissey repeatedly took loans from
the Defined Benefit Plan leaving minimal cash balances. From
February 12, 1988, forward the cash balance in the Defined
Benefit Plan Trust account was less than $5,000, even though the
vested benefits of participants as of the end of the plan years
ended October 31, 1989 and 1990, were $335,384 and $341,583,
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