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On May 15, 1990, petitioner elected to transfer from the
Retirement System to the Pension System, effective June 1, 1990.
As a result of the election to transfer, petitioner received a
distribution (the Transfer Refund) from the Retirement System in
the amount of $338,451.01. Petitioner received the Transfer
Refund in the form of two checks dated June 29, 1990, and
November 30, 1990.
Petitioner's Transfer Refund consisted of $37,064.27, in
previously taxed contributions made by petitioner during his
employment tenure with Hagerstown Junior College, $402.70 in
employer "pick-up contributions"4 and interest thereon, and
$300,984.04 of taxable earnings in the form of interest. The
earnings, "pick-up contributions", and interest on the pick-up
contributions; i.e. $301,386.74, constitute the taxable portion
of the Transfer Refund.
When petitioner transferred from the Retirement System to
the Pension System, and when he received his Transfer Refund, he
had attained the age of 56. 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
normal service retirement benefit, including a regular monthly
annuity, at age 60. He would not have been entitled to receive a
4 See sec. 414(h)(2). The parties stipulated that
petitioner received $403.70 of employer pick up contributions and
interest; however, the record demonstrates that petitioner
actually received $402.70 of such contributions and interest.
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