Cite for Voluntary After Tax Distributions

[Guest Powers]

I have a client whose plan allows for voluntary after tax contributions. There is a participant who would like to withdraw a specific dollar amount from the voluntary account. She would like not to withdraw any of the interest, just the pure contributions. I advised that we are required to distribute proportionately the contributions and the earnings. Well, I just received a call from my client requesting a cite and I can not find one. Does anyone know of the cite that states this.

I have been administering plans this way for so long that I have no idea where or when I became aware of this 'staple' in administration.

Thanx in advance for your help!

[E as in ERISA]

It doesn't matter which dollars you are distributing. Section 402 says that Section 72 controls the taxation of these monies. And under Section 72, she will only recover part of her basis in the distribution (and the rest will be taxed).

[Guest Powers]

Thank You, Katherine.

[Guest death and taxes]

If the contributions are pre-87, they can be withdrawn without earnings.

[QDROphile]

The plan document has to be drafted properly to preserve the right to withdraw pre-1987 after-tax contributions only. Chances are good that bad drafting precludes the separate withdrawal. You have somewhat better odds if the plan stopped taking after- tax amounts after 1986.