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Letter Ruling

Letter Ruling Letter Ruling 82-118: Make-Up Payment to County Retirement System

Date: 12/17/1982
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Personal Income Tax

December 17, 1982


The ********** Collaborative is an educational collaborative formed by several school committees to conduct joint educational programs to supplement or strengthen school programs and services pursuant to General Laws Chapter 40, Section 4E. You worked for the Collaborative from October 27, 1975 through August 31, 1981. During that period Collaborative employees were not considered eligible for participation in a public pension system. It was subsequently determined that you were eligible for such participation.

The ********** County Retirement System permitted you to purchase credit for that period of time during which you worked for the Collaborative but were considered ineligible for member­ship in a state or local retirement system. This could be done by paying into the retirement system a lump sum equal to the amount which would have been withheld as regular deductions for retirement purposes from your compensation had you been a public employee for pension purposes, plus the interest which would have accrued on such deductions.

You made the lump-sum make-up payment for the period from October 27, 1975 to August 31, 1981 in 1982. The total payment was $5,689.57; $4,500.45 in retirement deduction equivalent and $1,189.12 in interest equivalent. You request a ruling as to the deductibility of this payment on your 1982 income tax return.

General Laws Chapter 62, section 3(B)(a)(4) provides a deduction from Part B income for all sums deducted from wages as contributions to a pension fund of the Commonwealth or any subdivision thereof.

The $4,500.45 retirement deduction component of the make-up payment is equivalent to deductions that would have been taken had you been participating in the pension system. The balance of $1,189.12, representing the interest component of your make-up payment, is not equivalent to any deduction that would have been allowed had you been making pension fund contributions.

Based on the foregoing, it is ruled that the $4,500.45 retirement deduction component of the make-up payment (for which no prior tax deduction has been taken) is deductible from Massachusetts adjusted gross income in 1982. The interest component of the make-up payment is not deductible.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue


LR 82-118

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