Is involuntary separation qualified as to the length of service and age of the official or employee?
No. Amounts received by reason of involuntary separation remains exempt from tax and is not qualified as to the length of service and age of the official or employee. Thus, it is generally only those who voluntarily resign after 10 years of service who will be taxed on their separation benefits prior to retirement. Those who are separated due to sickness, redundancy or retrenchment to avoid serious business losses or the installation of labor-saving devices will still be entitled to tax exemption of their separation benefits under the Labor Code. Moreover, the member shall be entitled to 100% of the amount standing to his credit regardless of such members length of service, or the amount due him under the law, whichever is higher.
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