Harold L. and Gladys M. Humberson - Page 11

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               By contrast, petitioners contend that petitioner received              
          the entire account balance from the Retirement System when he               
          received the Transfer Refund.11  Therefore, petitioners conclude            
          that the "balance to the credit" requirement of section                     
          402(e)(4)(A) is satisfied.                                                  
               We begin our analysis with section 402(e)(4)(C).  That                 
          section provides, in relevant part, as follows:                             
                    (C) Aggregation of certain trusts and plans.--For                 
               purposes of determining the balance to the credit of an                
               employee under subparagraph (A)--                                      
                    (i) all trusts which are part of a plan shall                     
                    be treated as a single trust, all pension                         
                    plans maintained by the employer shall be                         
                    treated as a single plan * * * .  [Emphasis                       
                    added.]                                                           
               During the years in issue, the State of Maryland maintained            
          both the Retirement System, in which petitioner participated                
          until March 1, 1990, and the Pension System, to which petitioner            
          transferred effective as of that date.  Accordingly, in order to            
          decide whether petitioner received the "balance to the credit",             
          we must treat the Retirement System and the Pension System as a             
          single pension plan.  Sec. 402(e)(4)(C).                                    
               Under Maryland law, petitioner's annuity under the Pension             


          11 Respondent appears to concede implicitly that the                        
          Transfer Refund included all of petitioner's contributions and              
          the earnings thereon.  Cf. Wheeler v. Commissioner, T.C. Memo.              
          1993-561 (a member of the Retirement System did not receive the             
          "balance to the credit" upon receiving a Transfer Refund; a                 
          portion of the member's contributions was transferred from the              
          Retirement System to the Pension System).                                   




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