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guaranteed any particular benefit, but rather is
provided with the account balance at retirement.
Section 414(k) provides that where a defined benefit
plan provides a benefit based on the separate account
of a participant, it may [be] treated as a defined
contribution plan. In essence, section 414(k) creates
a hybrid plan consisting of both a defined benefit and
defined contribution plan. In so doing, the separate
account of the participant must therefore maintain the
characteristics of a defined contribution plan. Merely
maintaining records to keep track of an individual's
contribution does not satisfy this requirement. [Id. at
470-471; emphasis added.]
The Ninth Circuit went on to observe that, because Malbon's
benefits were determined on the basis of average salary and years
of service and because the return of his contributions included
no increment for earnings thereon, there was no benefit based
upon the balance of the separate account of the taxpayer as
required by section 414(k). Without such a benefit, the court
concluded that the CSRS did not have a defined contribution
component, and Malbon's lump-sum credit was taxable in the year
received. Accord Montgomery v. United States, 18 F.3d 500 (7th
Cir. 1994); Green v. Commissioner, T.C. Memo. 1994-340.
Although petitioners concede that "the clear language of the
statutes * * * must control the outcome of this case," they also
assert that the legislative history and other nonstatutory
evidence requires a different conclusion. The Ninth Circuit in
Malbon v. United States, supra at 471, fn. 11, considered
sections 72 and 414 to be unambiguous and refused to rely upon
legislative history. Consequently, in this framework,
petitioners' argument misses the mark.
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