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August, he purchased another annuity, a qualified annuity, from
Southern Farm Bureau Life Insurance Co., funded with an initial
contribution of petitioner’s IRA CDs.6
In August 1996, petitioner left the Oldenettel & Sadberry
firm to join the law firm of Soules & Wallace in San Antonio.
Soules & Wallace did not have a section 401(k) retirement plan,
and that motivated petitioner to engage in an additional
retirement planning transaction based on the advice of the
accountant for his former law firm, Mr. Wendel. Because of his
understanding that a simplified employee pension (SEP) plan
allowed for greater funding than an IRA, petitioner purchased an
SEP plan late in 1996.7 However, he became concerned about
possible tax consequences of participating in a 401(k) plan and
an SEP plan in the same year. He therefore terminated the SEP
plan and deposited the funds from the SEP into the SFB
nonqualified annuity, again with the advice of Mr. Wendel.
5(...continued)
Premium Retirement Annuity, policy number 185128F. Petitioner
likewise did not elect to include this annuity as a qualified
retirement plan.
6 Southern Farm Bureau Life Insurance Co., Flexible
Premium Retirement Annuity, policy number 186618F. Petitioner
elected to include this annuity as part of a qualified retirement
plan.
7 Southern Farm Bureau, Flexible Premium Retirement
Annuity, policy number 200288F. A SEP, as defined under sec.
408(k), is a qualified plan.
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