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contribution is withheld. Malbon v. United States, 43 F.3d 466,
467 (9th Cir. 1994). Contributions by the employing agency and
any accrued interest are taxable upon distribution to the
eligible employee. Secs. 72, 402(a).
Federal employees who met the retirement eligibility
requirements and retired after June 5, 1986, could elect the
basic annuity or the alternative annuity. 5 U.S.C. secs.
8342(a), 8343a. The basic annuity is determined by years of
service and salary at retirement. 5 U.S.C. sec. 8339. The
alternative annuity provides the employee with a lump-sum credit
and a reduced annuity. 5 U.S.C. sec. 8343a. A lump-sum credit
is the unrefunded amount of the employee's contributions and
deposits covering earlier service. 5 U.S.C. sec. 8331(8).2 The
present value of the alternative annuity is designed to be the
25 U.S.C. sec. 8331(8) (Supp. 1991) defines a lump-sum
credit, in part, as the unrefunded amount consisting of:
(A) retirement deductions made from the basic pay of an
employee * * *;
(B) amounts deposited by an employee * * * covering
earlier service, including any amounts deposited under
section 8334(j) of this title; and
(C) interest on the deductions and deposits at 4
percent a year to December 31, 1947, and 3 percent a
year thereafter compounded annually to December 31,
1956, or, in the case of an employee * * * separated or
transferred to a position in which he does not continue
subject to this subchapter before he has completed 5
years of civilian service, to the date of the
separation or transfer * * *
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