On the 1099-R, Box 9b is the "Total employee contribution".
- The Total employee contribution is the amount of after-tax dollars that the taxpayer contributed to the retirement plan over the years while he/she was employed. This is called your Basis.
- When the taxpayer retires, then the pension or annuity from the retirement plan begins. As the payments are made to you, each payment consists of a little bit of that "basis" and a lot of the money that the company is contributing.
- You will not owe tax on the "basis", because it is after-tax dollars that you contributed.
- The employer's contribution is, of course, taxable.
- This means, for example if a taxpayer received $12,000 in pension payments. Perhaps only $11,600 might be taxable. The left over $400 of the payments was the return of the "basis".
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