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OPINION
I. Rollover Issue
The pivotal issue in this case is whether petitioner's
Transfer Refund qualifies for tax-free rollover treatment under
section 402(a)(5). The resolution of this issue turns on whether
the Transfer Refund constitutes either a "qualified total
distribution", as defined by section 402(a)(5)(E)(i), or a
"partial distribution", as defined by section 402(a)(5)(D)(i).
Petitioners concede that the Transfer Refund does not
qualify as a partial distribution under section 402(a)(5)(D). In
view of the fact that the Transfer Refund was not received on
account of death, disability, or separation from the service, but
rather on account of petitioner's election to transfer from the
Retirement System to the Pension System, petitioners' concession
is required by both statutory and case law. See sec.
402(a)(5)(D)(i)(I), (e)(4)(A); Wittstadt v. Commissioner, T.C.
Memo. 1995-492, and cases cited therein; Conway v. United States,
76 AFTR 2d 95-6918 (D. Md. 1995).
On the other hand, petitioners do not concede that the
Transfer Refund does not constitute a qualified total
distribution. However, they have not actively argued this issue,
but rather have essentially reserved the right to pursue it on
appeal. In this regard, petitioners recognize that the existing
case law of this Court, as well as the U.S. District Court for
the District of Maryland, supports the conclusion that the
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