- 17 -
distribution issue that this Court has reached. Sites v. United
States, 75 AFTR 2d 95-2504, 95-1 USTC par. 50,280 (D. Md. 1995).
The final paragraph of the district court's analysis deserves to
be quoted:
The Court believes that the statutory analysis and
reasoning of Hoppe [v. Commissioner, T.C. Memo. 1994-
635] is sound. Because the Retirement System and
Pension System were both maintained by Taxpayer's
employer, the State of Maryland, they are to be
aggregated for purposes of determining the "balance to
the credit" of an employee under section 402(e)(4)(A).
Whereas Taxpayer received a refund of his contributions
and the accumulated interest, his service credits were
transferred to and remained within the Pension System.
* * * By choosing to transfer to the Pension System, *
* * [Taxpayer] opted * * * to receive a refund of his
contributions and accumulated interest along with
reduced annuity payments in the future. Thus, in
effect, Taxpayer elected to receive the "balance to the
credit" of his account in two-parts: the refund payment
and the future annuity payments. Consequently, he did
not receive the "balance to the credit" of his account
on * * * [the Transfer Refund date]. Id. [75 AFTR 2d
95-2504, 95-1 USTC par. 50280 at 88,031].
Section 72(t) Additional Tax Issue
We turn next to respondent's determination that petitioners
are liable for the 10-percent additional tax imposed by section
72(t).
Section 72(t) provides for a 10-percent additional tax on
early distributions from qualified retirement plans. Subsection
(1), which imposes the tax, provides in relevant part as follows:
(1) Imposition of additional tax.--If any taxpayer
receives any amount from a qualified retirement plan
* * * the taxpayer's tax under this chapter for the
taxable year in which such amount is received shall be
increased by an amount equal to 10 percent of the
portion of such amount which is includible in gross
income.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011