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operative CWU retirement plan documents. Consequently, we turn
our attention to the controlling Federal and State law that
informs the manner in which we resolve the issue here in dispute.
Section 61(a) provides that gross income includes all income
from whatever source derived, including income from annuities and
“income in respect of a decedent”. Sec. 61(a)(9), (14).
Section 403(b)(1) generally provides that if an annuity
contract is purchased for an employee by certain tax-exempt
employers, or for an employee who performs services for an
educational organization by an employer as described in section
403(b), and if certain other requirements are met, then amounts
contributed by such employer for such annuity contracts shall be
excluded from the gross income of the employee for the taxable
year. Amounts distributed from employee annuity contracts under
section 403(b) are taxable to the distributee in the year in
which distributed under section 72. Sec. 403(b)(1).
Section 72(e) provides, in general, that if a distribution
is received prior to the annuity starting date, in a form other
than an annuity, such distribution shall be included in gross
income. Under the general rule, amounts received before the
annuity starting date are included in income to the extent such
amounts are allocable to income on the contract, and not included
in income to the extent such amounts are allocable to the
investment in the contract. Sec. 72(e)(2)(B).
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