National Securities Clearing Corporation's (NSCC) Fund/SERV system is the industry standard for the automated and centralized processing of mutual fund orders, account registration and centralized net settlement. In November 1996, NSCC successfully implemented enhancements to Fund/SERV enabling two mutual fund companies to initiate, acknowledge, confirm and settle the transfer of Individual Retirement Arrangement (IRA) accounts between two funds, utilizing a centralized, standardized and automated process. This method of executing fund to fund transfers was initially referred to as the Retirement Asset Transfer (RAT) service, but will now be referred to as the Transfer of Retirement Assets (ToRA) service.

Provisions of the Taxpayer Relief Act of 1997 have resulted in the need to incorporate new retirement plan types and conversion processing functionality into the ToRA service. The modifications detailed in this notice will provide additional features and flexibility for all participants using the ToRA service. Effective September 30, 1998 ToRA will be modified to accommodate additional plan types and allow transfers which involve Traditional IRA to Roth IRA conversions.

I. Additional Plan Types

The Receiving/Delivering Fund Plan Type field contained on the ToRA Initiation Record (Record Type 210), ToRA Acknowledgment (Record Type 211), ToRA Confirmation (Record Type 212), and ToRA Reconfirmation (Record Type 213) records will be modified to include seven newly defined plan types.

II. Additional Transaction Types: Traditional IRA to Roth Conversion IRA

The ability to process transfers from Traditional IRA accounts to Roth Conversion IRA accounts through ToRA will be made available through the use of two new ToRA Transaction Types. The Full (Transaction Type 2) and Partial (Transaction Type 3) Distribution to Alternate Address ToRA Transaction Types are to be used only with the new Receiving/Delivering Fund Plan Type indicator defined as Traditional IRA to Roth Conversion IRA (Receiving/Delivering Fund Plan Type 9). This will indicate to ToRA users that the transaction is a Traditional IRA to Roth Conversion IRA transfer request.

The ToRA process of completing a Traditional IRA to Roth Conversion IRA transfer should function as follows:

The Receiving Fund wants to have the Delivering Fund transfer a Traditional IRA account to them to be established at the Receiving Fund as a Roth Conversion IRA. The Receiving Fund will input a ToRA Initiation Record (Record Type 210) indicating a transaction type of either Full (Transaction Type 2) or Partial (Transaction Type 3) Distribution to Alternate Address and indicating a Receiving Fund Plan Type of Traditional to Roth Conversion IRA (Receiving Fund Plan Type 9).

In response, the Delivering Fund should submit a ToRA Acknowledgment Record (Record Type 211) also indicating a Transaction Type of either Full (Transaction Type 2) or Partial (Transaction Type 3) Distribution to Alternate Address and indicating a Receiving Fund Plan Type of Traditional to Roth Conversion IRA (Delivering Fund Plan Type 9). By utilizing the Receiving Fund Plan Type of Traditional to Roth Conversion IRA (Delivering Fund Plan Type 9), the Delivering Fund is acknowledging that the account is currently an IRA or IRA Rollover and will be converted to a Roth Conversion IRA when established at the Receiving Fund.

The ToRA Confirmation Record (Record Type 212) should also include a Transaction Type of either Full (Transaction Type 2) or Partial (Transaction Type 3) Distribution to Alternate Address and indicate a Receiving Fund Plan Type of Traditional to Roth Conversion IRA (Delivering Fund Plan Type 9). If the account at the Delivering Fund is not eligible to be transferred or converted, the original ToRA Initiation Record (Record Type 210) should be rejected back to the Receiving Fund by the Delivering Fund utilizing the Fund Rejection of Order (Record Type 100) with the appropriate reject code.

III. Original Roth IRA Date

The Original American Dream Date field will be renamed the Original Roth IRA Date field. This field will be required on the ToRA Acknowledgment (Record Type 211) and ToRA Confirmation (Record Type 212) for Roth IRA to Roth IRA transfers (Receiving/Delivering Fund Plan Type Plan Type 4) and Roth Conversion IRA to Roth Conversion IRA transfers (Receiving/Delivering Fund Plan Type Plan Type 8).

IV. Revised Record Layouts

The revised record layouts for the Transfer of Retirement Assets (ToRA) service as outlined in this notice are available on NSCC’s Year 2000 file formats web page at www.y2000.org/nscc, along with all other existing Mutual Fund Services record layouts.

Fixed Length 6-digit date format (page 5)

Variable Length 6-digit date format (page 6)

Fixed Length Y2K 8-digit date format (page 7)

Variable Length Y2K 8-digit date format (page 8)

V. Implementation Plan

Members of the ICI Transfer of Retirement Assets User Group have committed to testing these enhancements prior to the effective date of September 30, 1998. Beginning August 30, 1998 ToRA users can begin testing these enhancements in NSCC’s Participant Test Region. Although these modifications do not impose any additional requirements for participants, NSCC encourages the testing of these changes by all ToRA participants prior to implementing these enhanced processing capabilities.

For additional information regarding the Transfer of Retirement Assets (ToRA) service or other Mutual Fund Services, please contact your NSCC account manager or NSCC’s Mutual Fund Services Hotline at (212) 412-8893. Questions, comments or concerns regarding these enhancements to the Transfer of Retirement Assets (ToRA) service outlined in this notice should be directed to the undersigned at (212) 412-8848.

 Adam H. Purcell
Participant Services Representative

APPENDIX A. Receiving/Delivering Fund Plan Types:

Fixed Length (six-digit date format)

Fixed Length (six-digit date format)

Fixed Length (six-digit date format)