FORM 11-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

þ		Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2005

o		Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

A.

Full title of the plan and the address of the plan, if different from that of the issuer named below:

Inter-Tel, Incorporated

Tax Deferred Savings Plan and Retirement Trust

1615 South 52^nd Street
Tempe, AZ 85281

B.

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Inter-Tel, Incorporated

1615 South 52^nd Street
Tempe, AZ 85281

 

 

INTER-TEL, INCORPORATED
TAX DEFERRED SAVINGS PLAN AND RETIREMENT TRUST

Financial Statements and Supplemental Schedule
December 31, 2005 and 2004

Table of Contents

		Page
Report of Independent Registered Public Accounting Firm			1
Financial Statements:
Statements of Net Assets Available for Benefits			2
Statement of Changes in Net Assets Available for Benefits			3
Notes to Financial Statements			4-7
Supplemental Schedule:
Schedule H, Line 4(i) — Schedule of Assets (Held at end of year)			8-15
EX-23.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and the Plan Administrator of the

INTER-TEL, INCORPORATED TAX DEFERRED SAVINGS PLAN AND RETIREMENT TRUST

We have audited the accompanying statements of net assets available for benefits of Inter-Tel, Incorporated Tax Deferred Savings and Retirement Trust at December 31, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Inter-Tel, Incorporated Tax Deferred Savings Plan and Retirement Trust at December 31, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005 in conformity with U.S. generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management, and has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ MAYER HOFFMAN MCCANN P.C.

June 15, 2006
Phoenix, Arizona

INTER-TEL, INCORPORATED
TAX DEFERRED SAVINGS PLAN AND RETIREMENT TRUST

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

		December 31,
		2005				2004
ASSETS:
Cash and cash equivalents		$	15,030			$	10,265
Investments, at fair value			67,031,368				58,773,340
Receivables
Employer contribution			1,903,281				1,752,905
Participant contributions			213,505				164,999
Total receivables			2,116,786				1,917,904
Total Assets			69,163,184				60,701,509
LIABILITIES:
Excess contribution refund payable			124,273				109,974
NET ASSETS AVAILABLE FOR BENEFITS		$	69,038,911			$	60,591,535

See accompanying notes to financial statements.

INTER-TEL, INCORPORATED
TAX DEFERRED SAVINGS PLAN AND RETIREMENT TRUST

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

Year ended December 31, 2005

Additions:
Contributions:
Employer		$	1,905,906
Participant			6,319,163
Rollovers			657,130
Total contributions			8,882,199
Interest and dividends			2,477,970
Net appreciation in fair value of investments			242,117
Total additions			11,602,286
Deductions:
Benefits paid to participants			3,095,694
Administrative expenses			59,216
Total deductions			3,154,910
Net increase			8,447,376
Net assets available for benefits, beginning of year			60,591,535
Net assets available for benefits, end of year		$	69,038,911

See accompanying notes to financial statements.

INTER-TEL, INCORPORATED
TAX DEFERRED SAVINGS PLAN AND RETIREMENT TRUST

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005 AND 2004

(1)		Description of the Plan
		The following description of the Inter-Tel, Incorporated Tax Deferred Savings Plan and Retirement Trust (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
		General — The Plan is a defined contribution plan covering all employees of Inter-Tel, Incorporated and its subsidiaries (the “Company”). Effective January 1, 2001, an employee becomes eligible to participate in the Plan subsequent to the pay period in which the employee completes one hour of service. Effective November 1, 2005, new employees are automatically enrolled at 1% unless they elect not to participate. The Plan was established on December 1, 1984 and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
		Contributions — Each year, participants may contribute to the Plan a percentage or dollar amount of their annual compensation up to the annual IRS maximum through regular payroll deductions. At any time during the year, participants have the opportunity to change the previously elected percentage or dollar deferral. Participants employed by the Company on December 31 of each year are eligible to receive a discretionary matching Company contribution. For 2005, the Company matched 50% of the participant’s basic contribution limited to six percent of the participant’s 2005 compensation. At the Company’s discretion, it may allocate additional funds at the end of each Plan year based on each participant’s salary.
		Participant accounts — Each participant’s account is credited with the participant’s contributions, the Company’s contributions and an allocation of Plan earnings. Allocations are based on participant account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account. Participants may elect to have their accounts invested in mutual funds or common stock of the Company as offered by the Plan, or they may elect to have their accounts invested in any combination of common and preferred stocks, bonds and mutual funds, through individual self-directed brokerage accounts.
		Vesting — Participants immediately vest in their voluntary contributions plus actual earnings thereon and amounts rolled over from former plans into the Plan. Vesting in the Company’s matching contribution is based on years of continuous service. The employer contribution portion of each participant account vests starting at the first year of service at a graduated amount each year until reaching the sixth year of service. After six years, the participant is 100 percent vested in the employer contribution account.

		Forfeitures — Forfeited balances of terminated participants’ nonvested accounts are used to reduce employer contributions. In 2005, forfeitures totaled $130,577 and are reflected as a reduction of the employer contributions receivable and employer contributions at December 31, 2005 in the accompanying financial statements.
		Participant loans — Participants can borrow from their fund amounts a minimum of $1,000, up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms range from one to five years or up to twenty years for the purchase of a primary residence. Loans are secured by the balance in the participant’s account and bear interest at a rate commensurate with prevailing rates at the time the loan is made as determined by the loan administrator. Principal and interest is paid ratably through payroll deductions.
		Payment of benefits - Upon termination of service, a participant may receive a lump-sum amount equal to the vested value of his or her account, or upon death, disability, or retirement, elect to receive annual installments over a 10 year period.
		Plan termination - Although it has not expressed any intent to do so, the Company has the discretionary right to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of termination of the Plan, participants will become 100 percent vested in all of their accounts.
(2)		Significant accounting policies
		The significant accounting policies followed by the Plan are as follows:
		Investment valuation and income recognition — The Plan’s investments are stated at fair value. Securities and mutual funds traded on national securities exchanges are valued at the last quoted sales price on the principal exchange on which traded. Securities and the limited partnership for which no price is readily available on the valuation date are valued at fair value as determined by the Plan Administrator. Participant loans are valued at their outstanding balances, which approximates fair value. The fair value of units of common/collective trusts are determined by Charles Schwab Trust Company.
		Purchases and sales of securities are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
		Use of estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net assets, and the reported amounts of changes in net assets during the year. Actual results could differ from those estimates.
		Concentrations of credit risk — The Plan provides for various investment fund options, which in turn invest any combination of mutual and other investment funds.

		Investment securities are exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in risks in the near term could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.
(3)		Investments
		Investment information is summarized as follows:

		December 31
		2005				2004
Investments at fair value:
Common stock		$	8,236,736			$	7,076,257
Preferred stock			3,645				3,750
Corporate obligations			51,714				61,039
Common/collective trusts			3,858,278				1,955,373
Money market accounts			8,551,687				8,114,166
Mutual funds			44,368,577				38,506,142
Unit investment trusts			317,142				1,560,551
Participant loans			1,579,458				1,435,900
Other assets			10,186				—
Limited partnerships			11,133				17,350
Promissory note			12,612				12,612
Limited liability company units			30,200				30,200
Total investments, at fair value		$	67,031,368			$	58,773,340

During 2005, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in fair value as follows:

Common stock		$	(513,019	)
Preferred stock			(102	)
Corporate obligations			(9,090	)
Common/collective trusts			224,493
Mutual funds			549,175
Limited partnerships			1,188
Unit investment trusts			(10,528	)
		$	242,117

Investments that represent five percent or more of the Plan’s net assets at December 31 are as follows:

		2005
Schwab Government Securities Fund		$	7,669,598
Baron Growth Fund			3,824,734
First Eagle Overseas A			7,011,060
Growth Fund of America R4			6,344,575
Icon Information Tech Fund			3,656,483

		2005
Schwab S&P 500 Index Inv			4,862,510
Vanguard Selected Value			4,539,119
Vanguard Windsor II Fund			6,897,170

		2004
First Eagle Overseas A		$	5,153,620
Growth Fund of America CL F			5,332,963
Icon Information Tech Fund			4,075,227
Inter-Tel, Incorporated Common Stock			4,126,330
Pimco Renaissance Fund D			5,197,518
Schwab Government Security Fund			7,230,469
Schwab S&P 500 - Investor SHS			4,364,578
Vanguard Windsor II Fund			5,589,981

(4)		Administrative expenses
		Substantially all of the Plan’s administrative expenses, except for record-keeper fees, are paid by the Company.
(5)		Party-in-interest transactions
		Certain plan investments are shares of common stock of the Company or are funds held and managed by Charles Schwab Trust Company, the trustee; therefore, these transactions qualify as party-in-interest transactions. Fees paid and accrued by the Plan to the trustee for administrative fees amounted to $59,216 for the year ended December 31, 2005.
(6)		Income tax status
		The Plan has received a determination letter from the Internal Revenue Service dated February 11, 2004 stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (''the Code”) and, therefore, the related trust is exempt from taxation. Subsequent amendments have been structured to and are intended to maintain the Plan’s tax status. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code, and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.

INTER-TEL, INCORPORATED		EIN: 86-0220994

SCHEDULE H, LINE 4(i)
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2005

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

Common stocks:

**

AT&T Inc

9,000 shares

**

$

220,410

ABB Ltd ADR

400 shares

**

3,888

ADAPTEC

200 shares

**

1,164

Advanced Photonix CL A

1,000 shares

**

2,760

Advanced Viral Research

13,000 shares

**

910

Alexander & Baldwin, Inc.

50.694 shares

**

2,750

Allianz AG ADR

300 shares

**

4,542

Aluminum Corp China ADR

6 shares

**

458

Amazon Com, Inc.

200 shares

**

9,430

Amdocs Limited

200 shares

**

5,500

America Movil ADR

300 shares

**

8,709

American Cap Strategies, Ltd

100 shares

**

3,621

American International Group

5,000 shares

**

341,150

American Technology Corp

2,000 shares

**

6,620

Amerisourcebergen Corp

200 shares

**

8,280

Ameritrade Hldg Corp

200 shares

**

4,800

Amgen Incorporated

49 shares

**

3,864

Amicas, Inc.

1,548 shares

**

7,678

Amsurg Corp

90 shares

**

2,057

Amylin Pharmaceuticals, Inc

2,000 shares

**

79,840

Anglogold Ashanti ADR

50 shares

**

2,466

Anheuser Busch Co. Inc.

300 Shares

**

12,888

Apple Computer, Inc.

110 shares

**

7,908

Applied Digital Solu

1,753 shares

**

5,013

Applied Materials, Inc.

400 shares

**

7,176

Arthrocare Corp

100 shares

**

4,214

Barrick Gold Corporation

400 shares

**

11,148

Best Buy, Inc.

225 shares

**

9,783

BHP Billiton Ltd ADR

100 shares

**

3,342

Bluefly, Inc.

2,597 shares

**

2,909

Broadwing, Corp

4 shares

**

24

Brown & Brown, Inc.

600 shares

**

18,324

CB Richard Ellis Group, Inc.

50 shares

**

2,942

Cal Dive International, Inc.

100 shares

**

3,589

Calamp Corp

200 shares

**

2,098

Calpine Corporation

1,000 shares

**

208

Castelle, Inc.

300 shares

**

930

Celgene Corp

60 shares

**

3,888

Cemex SA ADR

30 shares

**

1,780

China Pete & Chem ADR

45 shares

**

2,232

Cinergy Corp

40 shares

**

1,698

Cisco System, Inc.

3,350 shares

**

57,352

Coca Cola Company

352.622 shares

**

14,214

Coeur D Alene Mines CP

5,500 shares

**

22,000

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

Conexant Systems, Inc.

1,000 shares

**

2,260

Conoco Phillips

200.985 shares

**

11,693

Consolidated Edison, Inc.

40 shares

**

1,853

Covad Commun Group, Inc.

750 shares

**

735

Coventry Health Care, Inc.

6,000 shares

**

341,760

Critical Path, Inc.

6 shares

**

2

Cryptologic, Inc.

200 shares

**

3,918

Cummins Engine, Inc.

35.391 shares

**

3,175

Cyberonics, Inc.

100 shares

**

3,230

Davita, Inc.

45 shares

**

2,279

Dell, Inc.

500 shares

**

14,975

Desire Petroleum ORD

1,000 shares

**

566

Devon Energy CP

100 shares

**

6,254

Digital Lightwave, Inc.

210 shares

**

44

DSL.net, Inc.

1,000 shares

**

40

Dun & Bradstreet, Corp

4,000 shares

**

267,840

Earthshell, Corp

8,000 shares

**

16,000

EBay, Inc.

426 shares

**

18,412

Edulink, Inc.

43,000 shares

**

17

Emulex, Corp

600 shares

**

11,874

Encana Corporation

80 shares

**

3,613

Exxon Mobil Corporation

300.988 shares

**

16,906

First Horizon National Corp

40 shares

**

1,538

Flextronics International, Ltd.

600 shares

**

6,264

Forest Labs, Inc.

100 shares

**

4,068

Foster Wheeler, Ltd

900 shares

**

1,818

Foster Wheeler ORD

45 shares

**

1,655

Foundry Networks, Inc.

50 shares

**

690

Freeport-McMoran Copper & Go CL B

200 shares

**

10,760

Freescale SemiConductor CL B

161 shares

**

4,052

Frontline Ltd ORD

203.415 shares

**

7,713

Frozen Food Express INDS

270 shares

**

2,978

Garmin, Ltd

100 shares

**

6,635

General Electric Company

2,117.019 shares

**

74,202

Global Industries

70 shares

**

795

Globalstar Telecom ORD

500 shares

**

5

Goldcorp, Inc.

500 shares

**

11,140

Goldspring, Inc.

20,000 shares

**

440

Great Plains Energy, Inc.

50 shares

**

1,398

Gunslinger Records, Inc.

42,500 shares

**

43

Hewlett-Packard Company

689 shares

**

19,726

Hollis-Eden Pharmaceuticals, Inc.

1,000 shares

**

4,840

Home Depot, Inc.

1,291.157 shares

**

52,266

HSBC HLDGS PLC ADR

25 shares

**

2,012

Imergent, Inc.

250,000 shares

**

1,650,000

IMPath Liquidating TR

16 shares

**

32

Intel Corp

4,664.4 shares

**

116,423

Inter-Tel Inc. Common Stock

169,106 shares

**

3,309,404

Intl Business Machines

102.679 shares

**

8,440

Intl Game Technology

11 shares

**

339

Intuitive Surgical

50 shares

**

5,864

Ionatron, Inc.

3,000 shares

**

30,330

Iridium World Communications CL

60 shares

**

1

ISCO International, Inc.

4,640 shares

**

1,485

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

K-Tel Intl Inc.

362 shares

**

9

Keyspan Corp

45 shares

**

1,606

Knightsbridge Tankers, Ltd.

102.253 shares

**

2,480

Level 3 Communications, Inc.

2,000 shares

**

5,740

Ligand Pharmaceuticals Class B

300 shares

**

3,345

Lowes Companies

1,472.837 shares

**

98,179

Lucent Technologies, Inc.

18,368 shares

**

48,859

Mangosoft Inc.

9 shares

**

36

Marvel Entertainment, Inc.

100 shares

**

1,638

Marvell Tech Group, Ltd.

100 shares

**

5,609

Maxim Integrated prods, Inc.

65 shares

**

2,356

Maxtor Corp

1,000 shares

**

6,940

McHenry Metals Golf Corp

5,000 shares

**

1

McLeodUSA, Inc.CL A

111 shares

**

1

Merck & Co, Inc.

1,500 shares

**

47,715

Microage, Inc. Neomagic Corp.

250 shares

**

1

Microsoft Corp Network Commerce, Inc.

4,812.07 shares

**

125,836

Millipore Corp NMS Communications

50 shares

**

3,302

Motorola Incorporated Nokia Corp

1,723.877 shares

**

38,942

Movie Gallery, Inc. Nortel Networks Corp.

1,000 shares

**

5,610

Moving Bytes, Inc. Northpoint Communication Holdings

10,000 shares

**

100

National-Oilwell, Inc. Northwestern Corp.

92 shares

**

5,768

Neomagic Corp Novell, Inc.

100 shares

**

856

Neopharm, Inc. Oilex, inc.

300 shares

**

3,237

Netflix, Inc. Oracle Corp.

3,140 shares

**

84,968

Newmont Mining Corp Palm, Inc.

450.454 shares

**

24,054

NMS Communications Penn Traffic Co.

1,101 shares

**

3,842

Nokia Corp SPON ADR Perot System Corp.

594 shares

**

10,870

Nortel Networks CP Petsmart, Inc.

18,865 shares

**

57,727

Northpoint Commun HLDGS Pfizer, Inc.

1,000 shares

**

1

Novartis AG NovkPinnacle Systems

50 shares

**

2,624

O’Reilly Automotive, Inc. PNC Bk Corp.

1,000 shares

**

32,010

Oilex Inc. Polycom

9,000 shares

**

1

Oracle Corporation Practiceworks, Inc.

2,200 shares

**

26,862

Pacific Sunwear California Inc. Priceline.com, Inc.

100 shares

**

2,492

Packeteer, Inc. Qualcomm, Inc.

100 shares

**

777

Palm, Inc. Qwest Communications International

7 shares

**

223

Patterson Companies Read-Rite Corp.

300 shares

**

10,020

Petrochina CO ADR RF Micro Devices Inc.

35.853 shares

**

2,938

Pfizer Incorporated Ribozyme Pharm, Inc.

1,000 shares

**

23,320

Pinnacle West Cap Corp Ritchie Brothers Auctioneers

40 shares

**

1,654

Polycom Saba Software, Inc.

101 shares

**

1,545

Priceline.com Inc. Save the World Air, Inc.

33 shares

**

737

Procter & Gamble Co. Scientific Atlanta, Inc.

195 shares

**

11,287

Psychiatric Solutions Sears Roebuck & Company

65 shares

**

3,818

Qwest Communs International, Inc. Siebel Systems, Inc.

1,966.052 shares

**

11,108

Rayonier, Inc. Sonic Corp.

69.004 shares

**

2,750

Redhat, Inc. Southtrust Corp.

500 shares

**

13,630

Regions Financial CP Regions Southwest Airlines

40 shares

**

1,366

RF Micro Devices, Inc. Spectralink Corp.

100 shares

**

541

Ritchie Bros Auctioneers Storagenetworks, Inc.

1,000 shares

**

42,250

Sandisk, Corp. Sun Microsystems, Inc.

200 shares

**

12,564

Save the World Air, Inc. Sysco Corp.

5,900 shares

**

4,248

Scientific Atlanta, Inc. Target Corp.

50 shares

**

2,154

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

Sonic, Corp. Targeted Genetics Corp.

150 shares

**

4,425

Southwest Airlines, Co. Teardrop Golf Company

135 shares

**

2,218

Spectralink, Corp. Techne Corp.

500 shares

**

5,935

Starbucks, Corp. Telaxis Communications Corp.

30 shares

**

900

Stericycle, Inc. Telefonos de Mexico

50 shares

**

2,944

Stryker, Corp. Terayon Communication Systems

1,000 shares

**

44,430

Sun Microsystems, Inc. Texas Instruments, Inc.

1,200 shares

**

5,028

Suncor Energy, Inc. The Charles Schwab Corp.

50 shares

**

3,157

Superconductor Tech Tyco Intl. Ltd.

90 shares

**

39

Symantec Corp U. S. Physical Therapy, Inc.

200 shares

**

3,500

Sysco Corp Vitalworks, Inc.

1,000 shares

**

31,050

Target Corporation Vitesse Semiconductor Corp.

204.515 shares

**

11,242

Tektronix, Inc. Walgreen Company

100.255 shares

**

2,828

Telefon DE MX A ADR

200 shares

**

4,848

Tenaris S A ADR

55 shares

**

6,298

Terabeam, Inc.

450 shares

**

1,251

Texas Instruments, Inc.

700 shares

**

22,449

The Charles Schwab, Inc.

1,000 shares

**

14,670

Thor Industries, Inc.

100.737 shares

**

4,037

Tidewater Inc./Citizen Certificates

70.746 shares

**

3,145

Time Warner, Inc.

100 shares

**

1,744

TXU Corp

0.487 shares

**

24

Tyco Intl, Ltd.

500 shares

**

14,430

Universal Forest Product

55 shares

**

3,039

Universal Tech Institute

400 shares

**

12,376

Verisign, Inc.

200 shares

**

4,380

Vintage Pete, Inc.

0.138 shares

**

7

Wachovia, Corp.

2,780 shares

**

146,951

Wal-Mart Store, Inc.

1,030 shares

**

48,204

Walgreen Co.

203.864 shares

**

9,023

Washington Mutual Inc.

349 shares

**

15,182

Wattage Monitor, Inc.

6,000 shares

**

1

Wellpoint, Inc.

100 shares

**

7,979

Willis Group Holdings

300 shares

**

11,082

Xerox Corp.

1.947 shares

**

29

Zones, Inc.

200 shares

**

1,000

3Com Corp

100 shares

**

360

8x8 Inc

2,500 shares

**

4,625

Total common stocks

8,236,736

Preferred Stock:

Annaly Mtg Mgmt PFD

150 shares

**

3,645

Mutual funds:

Acadian Emerging Mkts Port Instl CL

384.556 shares

**

9,783

Allianz RCM Global healthcare Fund

553.710 shares

**

12,342

Alpine Intl Real Estate Equity FD

558.489 shares

**

16,972

American Balanced Fund CL

636.292 shares

**

11,339

Ariel

19,596.986 shares

**

981,221

Ariel Appreciation Fund

173.686 shares

**

8,115

Ariel Fund

572.752 shares

**

28,678

Artisan International Fund

693.896 shares

**

17,563

Artisan International Value Fund

153.356 shares

**

3,383

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

Artisan Midcap FD

176.568 shares

**

5,459

Artisan Midcap Value Fund

1,946.281 shares

**

36,493

Baron Asset Fund

65.789 shares

**

3,703

Baron Growth Fund

84,245.248 shares

**

3,824,734

Bridgeway Ultra-Small Co Market

1,431.858 shares

**

25,688

Burnham Financial Services FD

153.261 shares

**

3,241

Calamos Growth A

31,709.979 shares

**

1,745,951

Calamos Growth FD CL A

359.156 shares

**

19,775

Calvert Income Fund

156.452 shares

**

2,622

Chase Growth Fund

135.062 shares

**

2,620

*

Constellation TIP Health Biotech II

151.472 shares

**

2,414

Dodge & Cox Balanced Fund

719.391 shares

**

58,515

Dodge & Cox Intl Stock Fund

3,118.646 shares

**

109,246

Dodge & Cox Stock Fund

47.009 shares

**

6,450

Dreyfus Appreciation Fund

902.070 shares

**

35,857

Dreyfus Midcap Index Fund

419.987 shares

**

11,734

Dreyfus Premier Emerging Markets CL

639.740 shares

**

13,831

Dreyfus Small Cap Stock Index

334.815 shares

**

7,178

Equity Residual PPTY Trust

115.306 shares

**

4,511

Fairholme Fund

1,725.994 shares

**

43,478

Fidelity Latin American Fund

154.818 shares

**

4,951

Fidelity Magellan Fund

314.872 shares

**

33,515

First Eagle Overseas A

304,299.47 shares

**

7,011,060

FPA Capital Fund

1,130.048 shares

**

48,456

Franklin SM Cap Growth CL A

258.826 shares

**

9,763

Growth Fund of America R4

206,798.399 shares

**

6,344,575

Growth Fund of America CL Fund

624.787 shares

**

19,181

Harbor Bond Fund

108.302 shares

**

1,258

Harbor International Growth Fund

157.841 shares

**

1,733

Harding Loevner Emerging Markets

598.091 shares

**

20,808

Hennessy Cornerstone Growth Fund

1,698.097 shares

**

32,875

ICAP International Fund

206.756 shares

**

6,800

ICAP Select Equity Port

70.843 shares

**

2,562

Icon Information Tech Fund

418,361.857 shares

**

3,656,483

Inst’l Select S&P50 Index

1,773.357 shares

**

17,379

Janus Growth & Income Fund

405.449 shares

**

14,600

Janus Mid Cap Value Inv Shares

834.315 shares

**

18,622

Janus Overseas Fund

138.160 shares

**

4,398

JPMorgan Core Bond Fund

230,450.174 shares

**

2,449,685

Laudus US Small Cap Investor Shares

118.289 shares

**

1,453

Loomis Sayles Bond Fund

3,295.455 shares

**

44,686

Loomis Sayles Small Cap

651.242 shares

**

16,301

Managers Fremont Micro Cap Fund

51.921 shares

**

1,648

Managers Special Equity Fund

36.059 shares

**

3,129

Meridian Value FD

690.616 shares

**

23,916

MFA Mortgage Investments

300 shares

**

1,710

Navellier Mid Cap Growth

1,677.852 shares

**

49,077

NB Genesis Fund

129.555 shares

**

4,401

NB International FD Inv Class

821.953 shares

**

17,812

NB Ltd maturity Bond Fund

480.497 shares

**

4,387

Oakmark Equity Income FD

6,366.953 shares

**

159,046

Oakmark Fund

552.269 shares

**

22,577

Oakmark International Fund

303.547 shares

**

6,836

Oppenheimer Developing markets CL A

1,229.477 shares

**

44,667

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

Oppenheimer Intl Bond Fund CL A

443.664 shares

**

2,556

Pimco Emerging Markets Bond Fund CL D

452.554 shares

**

5,051

Pimco Total Return Fund Instl Class

8,166.556 shares

**

85,749

Pioneer Mid Cap Value Fund CL A

491.4 shares

**

11,469

Putnam Growth & Income CL A

1,513.304 shares

**

29,857

Putnam Intl Equity Fund CL A

115.054 shares

**

3,006

Royce Total Return Fund

1,725.171 shares

**

21,737

RS Smaller Company Growth Fund

855.139 shares

**

18,052

Schwab Premier Equity Inv Shares

1,006.438 shares

**

11,433

Schwab Short-Term Bond Market Index Fund

1,220.634 shares

**

12,133

Schwab S&P500 Index Inv

253,255.731 shares

**

4,862,510

Schwab Total Bond Market Index Fund

1,402.208 shares

**

13,868

Schwab Total Stock Market — Inv

17,583.441 shares

**

375,231

Schwab 1000 Index Fund — Investor SHA

413.086 shares

**

14,966

Selected American Shares

841.379 shares

**

33,849

Senior High Income Portfolio Inc.

112.367 shares

**

632

Sound Shore Fund

557.620 shares

**

20,426

SSGA Intl Stock Selection Fund

248.880 shares

**

2,745

Strong Advisor Common Stock Fund CL Z

726.838 shares

**

15,823

Tamarack Mico Cap Value Fund CL S

945.072 shares

**

18,920

Templeton Developing markets Trust

294.034 shares

**

6,886

Templeton Dragon Fund

185.864 shares

**

3,565

Templeton Emerging Market Fund

211.617 shares

**

4,116

Templeton Foreign Fund CL A

2,203.596 shares

**

27,942

Third Avenue Value Fund

272.885 shares

**

14,949

Torray Fund

118.8 shares

**

4,636

Tweedy Browne Global Value Fund

420.742 shares

**

11,108

US Global Regent Eastern European

714.151 shares

**

28,209

UMB Scout Small Cap Fund

162.244 shares

**

2,572

Value Line Income & Growth Fund

311.257 shares

**

2,605

Van Kampen Real Estate SEC Fund A

638.133 shares

**

15,775

Vanguard Energy Fund

496.067 shares

**

27,805

Vanguard GNMA Fund Investor SHS

283.848 shares

**

2,924

Vanguard Selected Value

240,674.382 shares

**

4,539,119

Vanguard Wellesley Income Fund

483.674 shares

**

10,191

Vanguard Windsor II Fund

220,145.872 shares

**

6,897,170

Vanguard 500 Index Fund Investor SHS

175.239 shares

**

20,138

WF Advantage Mid Cap Disciplined

323.198 shares

**

6,629

WF Advantage Ultra Short Term Income

1,673.537 shares

**

15,313

William Blair Intl Growth Fund

541.866 shares

**

13,666

Total Mutual funds

44,368,577

Unit Investment Trusts:

IShares MSCI Brazil Index

100 shares

**

3,337

IShares MSCI Japan Index Fund

600 shares

**

8,112

IShares TR Dow Jones Select Dividend

4,000 shares

**

245,040

Nasdaq 100 Shares

1,500.875 shares

**

60,653

Total Unit Investment Trusts

317,142

Money Market Accounts:

Schwab Cash Reserves Sweep Shares

31,727.550 shares

**

31,728

Schwab Money Market Fund

825,388.400 shares

**

825,388

Schwab US Treasury Money Fund

24,495.920 shares

**

24,496

(c) Description of

investment including

maturity date and rate

(b) Identity of issue, borrower,

of interest, collateral,

(e) Current

(a)

lessor or similar party

par or maturity value

(d) Cost

value

Schwab Government Securities Fund

7,669,597.85 shares

**

7,669,598

Stock Liquidity

477.52 shares

**

477

Total Money Market Accounts

8,551,687

Common/Collective Trusts:

Schwab Managed Retirement 2010

55,707.846 shares

**

769,883

Schwab Managed Retirement 2020

113,850.047 shares

**

1,702,058

Schwab Managed Retirement 2030

54,392.592 shares

**

865,930

Schwab Managed Retirement 2040

31,930.474 shares

**

515,677

Schwab Managed Retirement, Inc.

451.770 shares

**

4,730

Total Common/Collective Trusts

3,858,278

Corporate Obligations:

Swiss Government

65,000 shares

**

51,714

Other Assets:

San Juan Basin Royal TR

233.915 shares

**

10,186

Limited Liability Company Units

Angstrom Preferred Holdings, LLC

20,000 units

**

30,200

Promissory Note:

Baptist Foundation Promissory Note

Interest rate: 11.75%;

maturity date: November

7, 2012; unsecured

**

12,612

Limited Partnerships:

Beaconsfield LP Fund I

1 unit

**

11,133

Participant loans

Interest rates ranging

from 6.00% to 11.00%

**

1,579,458

Total investments

$

67,031,368

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Inter-Tel, Incorporated Tax Deferred Savings Plan and Retirement Trust has duly caused this report to be signed by the undersigned hereunto duly authorized.

Inter-Tel, Incorporated Tax Deferred Savings Plan and Retirement Trust

/s/ Kurt R. Kneip   Inter-Tel, Incorporated
Kurt R. Kneip
Sr. Vice President and Chief Financial Officer
Date: June 29, 2006

EXHIBIT INDEX

Exhibit:

Exhibit 23.1 — Consent of Independent Registered Public Accounting Firm