If the employee began depositing in July 1988, then the employee is vested in the employee portion. If the employer contributed matching funds, then the employee is fully vested and thus 100% applies to Bailey settlement. If the employer contributed a defined percentage, then the employee did not meet the three year requirement to be fully vested and thus will need to work the math in the link to figure the exclusion.
As you go through the NC interview in TurboTax you will be asked about the Bailey settlement and if you need to adjust, a box is provided to put in the amount of the retirement that should excluded under Bailey.
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