Taxpayers who make after-tax contributionsto a qualified employer plan recover theirinvestment (cost) when they begin to takeperiodic payments. How is their investmentrecovered?a. The after-tax portion is recovered firstb. the after-tax portion is recovered lastc. Part of each year's distribution is taxableand part is recovery of cost until all the cost isrecovered.d. Each year's distribution is multiplied by afixed percentage to determine the taxableamount and the cost recovery of eachdistribution.

Taxpayer who makes after tax contribution to a qualified employer plan recover their investment…

Answered: Taxpayers who make after-tax…

Taxpayers who make after-tax contributions to a qualified employer plan recover their investment (cost) when they begin to take periodic payments. How is their investment recovered?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 4FPE

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Question

Taxpayers who make after-tax contributions
to a qualified employer plan recover their
investment (cost) when they begin to take
periodic payments. How is their investment
recovered?
a. The after-tax portion is recovered first
b. the after-tax portion is recovered last
c. Part of each year's distribution is taxable
and part is recovery of cost until all the cost is
recovered.
d. Each year's distribution is multiplied by a
fixed percentage to determine the taxable
amount and the cost recovery of each
distribution.

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