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On January 26, 1998, petitioner received a retirement
distribution of $147,492.46 (the 1998 distribution), his entire
beneficial interest in the Pacific Telesis Group Pension Plan
(the plan).3 Both petitioner and Mrs. Barkley were 52 years old
when petitioner received the 1998 distribution.
In the documents he executed to receive the 1998
distribution, petitioner, as the plan participant, elected to
receive the distribution in a single payment. Although
petitioner also elected not to have State or Federal income tax
withheld from the 1998 distribution, $29,498.49 of Federal income
tax (20 percent of the distribution) was withheld. Mrs. Barkley
consented to petitioner’s receipt of the 1998 distribution and
waived her right to joint and survivor annuity payments.
After petitioner retired from Pacific Bell, he started
attending a local college to pursue a teaching certificate in
music and drama. In 1998 petitioner took only one voice class,
but in 1999 he was enrolled in several courses that required him
to spend time reading, writing papers, and studying for
examinations. By February 2001, petitioner had dropped out of
school completely because of the pressures of caring for Mrs.
Barkley and managing the apartment complex.
3We assume, and the parties have not disputed, that the
Pacific Telesis Group Pension Plan was a qualified plan within
the meaning of sec. 401(a).
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