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? The taxpayer completes an election form in the first year that periodic payments are made. The form allows them to select the years in which they recover the plan cost. Part of each year's distribution is taxable and part is recovery of cost until all the cost is recovered. The after-tax portion is recovered first. The after-tax portion is recovered last. Mark for follow up