Joe M. and Patricia M. Brown - Page 8

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               As previously indicated, petitioner elected to transfer from           
          the Retirement System to the Pension System on October 6, 1989.             
          On the application to transfer, petitioner specifically opted to            
          receive, in a lump sum, the distribution to which he was entitled           
          upon transferring from the Retirement System to the Pension                 
          System.                                                                     
               As a result of the election to transfer, petitioner received           
          a distribution (the Transfer Refund) from the Retirement System             
          in the amount of $244,151.04.  Petitioner received the Transfer             
          Refund in the form of a check dated October 31, 1989, from                  
          Maryland State Retirement Systems.                                          
               Petitioner's Transfer Refund consisted of $16,338.93 in                
          previously taxed contributions made by petitioner during his                
          employment tenure with the State, $1,005.11 of employer "pick-up            
          contributions",9 and $226,807 of earnings in the form of                    
          interest.  The earnings and "pick-up contributions", which total            
          $227,812.11, constitute the taxable portion of the Transfer                 
          Refund.                                                                     
               At the time that petitioner transferred from the Retirement            
          System to the Pension System and received the Transfer Refund, he           
          had attained the age of 52.  If petitioner had not transferred to           
          the Pension System but had remained a member of the Retirement              
          System, he would have been entitled to retire and receive a                 


          9 See sec. 414(h)(2).                                                       




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