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the recipient of the balance to the credit of an
employee which becomes payable to the recipient--
(i) on account of the employee's death,
(ii) after the employee attains age 591/2,
(iii) on account of the employee's separation from the
service, or
(iv) after the employee has become disabled * * *
from a trust which forms a part of a plan described in
section 401(a) and which is exempt from tax under
section 501 * * * . For purposes of this subsection,
the balance to the credit of the employee does not
include the accumulated deductible employee
contributions under the plan (within the meaning of
section 72(o)(5)). [Emphasis added.]
There is no dispute that the Retirement System is a plan
described in section 401(a) and that the trust forming a part
thereof is exempt from tax under section 501. Moreover, there is
no dispute that the Transfer Refund distribution was made within
a single taxable year. Therefore, we must decide (1) whether
petitioner received the "balance to the credit" when he received
the Transfer Refund and (2) whether the Transfer Refund became
payable to petitioner "on account of the employee's separation
from the service".
In support of her determination that petitioner did not
receive the "balance to the credit" when he transferred from the
Retirement System to the Pension System, respondent relies on the
fact that petitioner's years of creditable service under the
Retirement System carried over to the Pension System, see Md.
Ann. Code, art. 73B, sec. 144(4) (1988), and on the related fact
that those years of service increased the monthly annuity benefit
to which petitioner is entitled.
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Last modified: May 25, 2011