Plan Termination and rollover

[No Name]

Sole proprietor client terminated a Defined Benefit Plan in '03. Actuary calculated a required contribution of $25K. It was non-deductible because of no earned income. Deposit was made in 2004.

Participant (client) rolled over the balance of the DB to an IRA in '04.

I think I've looked this up, but 2 things:

1) Non deductible contribution OK in last year of the plan (no excise tax)

2) Rollover of said non-deductible contribution a) OK and b) creates no "basis" in the IRA.

I'm away from my files, so I can't rifle through it for my cites.

I'd like to sleep some time this week....

[Belgarath]

1. Agree. IRC 4972©(4). This isn't limited to just the final year contribution, by the way.

2. Agree.

Sleep well!