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1989. At the time of his retirement, petitioner was 54 years
old.
The Retirement System is a qualified defined benefit plan
under section 401(a). The Retirement System requires mandatory
nondeductible employee contributions. The Pension System is also
a qualified defined benefit plan under section 401(a) but
generally does not require mandatory nondeductible employee
contributions. The State of Maryland contributes to both the
Retirement System and the Pension System on behalf of the members
of those systems. The trusts maintained as part of the
Retirement System and the Pension System are both exempt from
taxation under section 501(a).
After the transfer, but before petitioner's retirement, the
Retirement System issued a check to petitioner in the amount of
$216,831.98 (the Transfer Refund).5 The Transfer Refund
consisted of $32,043.53 in previously taxed contributions made by
petitioner during his employment tenure as a teacher, $183,205.77
of earnings, and "pick-up contributions" of $1,582.68. See sec.
414(h). The earnings and "pick-up contributions" constitute the
taxable portion of the Transfer Refund.6
5 We view as legally irrelevant the fact that payment was
stopped on the Transfer Refund check because it was never
received, and that a second check for the same amount was issued
in Sept. 1989 after petitioner retired.
6 The sum of the earnings ($183,205.77) and "pick-up
contributions" ($1,582.68) equals $184,788.45. In the notice of
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