I have a plan where the plan has post tax Pre-84 employee contributions.
If a participant elects to receive a refund of the money we calculate a portion that will be nontaxable as part of the refund (using the IRS exclusion Ration) and the remaining nontaxable portion is captured in the residual annuity payments.
My question is whether or not it is allowable to have the non-taxable portion be only part of the refund or completely taken care of as part of the residual annuity. We are trying to simplify administration of the taxable payments and coding of a benefit system.
