- Pre-1987 contributions: Post-tax contributions to your Defined Contribution (DC) account that were made prior to Dec. 31, 1986 are 100 percent non-taxable. A special private letter ruling by the IRS allows you to receive the post-tax contributions made to your DC as of Dec. 31, 1986.
- Pre-tax contributions: The entire amount of your DC that has not had taxes withheld is taxable.
- Post-tax contributions: You may recover your 3 percent mandatory post-tax contributions, made after Dec. 31, 1986, with your monthly pension benefit. A portion of your post 1986 contribution may be recovered in a lump sum while the remainder must be recovered along with your pension. Your account balance and other factors determine if you can recover a portion of your post-tax dollars in a lump sum. The remainder of your post 1986 tax basis must be recovered over a set number of monthly payments. The IRS determines the rate of recovery. A part of each monthly payment is non-taxable as long as the tax basis remains.
Any additional voluntary post-tax contributions are treated in the same manner.