Pre-1987 contribution amount: You have two options for your pre-1987 contribution: 1) Receive the contribution, tax free, as a lump sum or 2) Annuitize the contribution with your monthly retirement payment. If you choose to annuitize, the pre-1987 portion will be non-taxable and it will be recovered over a set number of monthly payments.
Post-tax contribution amount: A portion of your pension benefit will be non-taxable until your post-tax contribution has been fully repaid to you. When your post-tax contribution has been fully recovered, the remainder of your benefit will be taxable. The after-tax contribution (tax basis) must be recovered over a set number of monthly payments. The IRS determines the rate of recovery.
Pre-tax contribution amount: All pre-tax contributions are taxable.