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enactment of the 1984 amendments by the Maryland State
legislature.
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.
On May 1, 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 $477,088.30. Petitioner received the Transfer
Refund in the form of a check dated June 29, 1990.
Petitioner's Transfer Refund consisted of $20,477.11 in
previously taxed contributions made by petitioner during his
employment tenure with Baltimore and Hagerstown Public Schools,
and $456,611.19 of taxable earnings in the form of interest. The
earnings; i.e. $456,611.19, 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 64. If petitioner had not transferred to
the Pension System but rather had remained a member of the
Retirement System, he would have been entitled to retire at an
appropriate age and receive a normal service retirement benefit,
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