DB Plan setup and deadline

[charlitsai]

Hi,

A TPA helped us to setup a DB Trust Plan and got a tax ID from IRS in Dec 2014. My question is

do I have to open an investment account before Dec 31 2014 in a financial institution, e.g. Vanguard, to meet IRS codes so that we could contribute fund and get tax deduction for 2014?

I got conflicting answers, some say no, we only need to establish an account before tax filing deadline (either March 15, 2015 or Sep 30 2015 for extension); other say yes - we have to setup at least one investment account before Dec 31 2014.

Please help me to clarify with this issue -

Thank you!

Charli T

[jpod]

You need to have a plan document and a trust agreement signed and dated before the end of 2014. No need to deposit any money before the end of the year.

[QDROphile]

Some trust institutions insist on at least nominal assets to be held in the trust before they consider the trust to be effective, but for tax purposes, having the documents properly adopted and executed by the end of the year should satisfy the IRS that the plan is effective for the year and post-year-end funding will relate to the year.

[charlitsai]

Thank you QDROphile and jpod!

A related question: With one trust tax ID, can we open two or more investment accounts in different firms like Vanguard and Fidelity?

[Mike Preston]

Yes, you use the same Trust ID on all investment accounts held under that trust, no matter how many there are.

[charlitsai]

thank you Mike P!