Greetings, Hillmp, and welcome. You wrote:<<My company's 403(b)(7) retirement plan is with Merrill Lynch. In February 1998, I put my money into a Dogs of the Dow (Dow 10) strategy mutual fund.I got a call from ML a couple days ago informing me:"During the course of our internal audit, we discovered that the Dow Fund you're in is not permitted for 403(b)s according to the IRS. It's not what they call a 'regulated investment company'. You'll have to sell that fund and buy another by June 11th or we'll do it for you."I'm looking for help seeing through my blind fury. I definitely don't think I shouldn't pay any fees for the buy and sell. Am I justified in seeking compensation for this interrupted strategy which is predicated on holding for a year? I bought the fund because historically it outperforms the S&P 500 by several percentage points. What advice does anyone have on how best to proceed (besides trying to get my company to move our money out of Merrill Lynch?)>>By law 403b plan monies may be invested only in annuities and/or "...in regulated investment company stock to be held in that custodial account." The latter is a mutual fund. Evidently, the Dow Fund you have selected for your investment does not meet the IRS's definition of a regulated investment company for that purpose. Accordingly, to remain qualified for continued tax-deferral, your 403b money may not remain in that investment.I suppose you could argue with ML about that agency allowing you to purchase that investment for your 403b, but I doubt you will get too much satisfaction there. You are responsible for the investment choice, not ML. They are responsible for custodial duties, one of which is ensuring that the investment meets the law's requirements. They did that by notifying you your particular investment does not. Still, one wonders why that agency allowed the purchase to begin with. Try that approach as an argument and see what happens. At least you might get them to waive the trading fees involved based on the fact they didn't warn you of the improper purchase when you made it.Regards..Pixy
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