Question $28$ of $30.$

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

The after$-$tax portion is recovered first.

The after$-$tax portion is recovered last.

Part of each year's distribution is taxable, and part is recovery of cost basis until all the cost basis is recovered.

Each year's distribution is multiplied by a fixed percentage to determine the taxable amount and the cost recovery of each distribution.

Mark for follow up