If a taxpayer funded some contributions to a qualified pension plan with previously-taxed dollars,then some of the distributions from that plan during retirement will be nontaxable.

Question

Quizplus · Accepted Answer

If a taxpayer contributes to a qualified pension plan with previously-taxed dollars, that portion will not be taxed again when it is later distributed during retirement. This is known as the "recovery of basis" rule under the tax code. However, any portion of the distribution that includes investment earnings will be subject to taxation.

If a Taxpayer Funded Some Contributions to a Qualified Pension