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Economic and Employment Development in Cambridge, Maryland.3 As
a Maryland State employee, petitioner was a member of the
Maryland State Employees' Retirement System (the Retirement
System) until she transferred to the Maryland State Employees'
Pension System (the Pension System), effective February 1, 1991.
A. The Retirement System and the Pension System
Both the Retirement System and the Pension System are
qualified defined benefit plans under section 401(a), and the
trust maintained as part of each plan is exempt from tax under
section 501(a).
The Retirement System requires mandatory nondeductible
employee contributions. In contrast, the Pension System does not
generally require such contributions. The State of Maryland
contributes to both the Retirement System and the Pension System
on behalf of the members of those systems.4
B. The Transfer Refund
On January 4, 1991, petitioner elected to transfer from the
Retirement System to the Pension System, effective February 1,
1991. As a result of the election to transfer, petitioner
3 Petitioner remained employed by the State of Maryland
at the time that this case was submitted to the Court in July
1996.
4 For a further discussion of the Retirement System and
the Pension System, see Adler v. Commissioner, 86 F.3d 378 (4th
Cir. 1996), vacating and remanding T.C. Memo. 1995-148; Maryland
State Teachers Association v. Hughes, 594 F. Supp. 1353, 1357-
1358 (D. Md. 1984).
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