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The portion of your spouse's payment that is considered life insurance would not be taxed. You can contact your plan administrator for more details on this. They would keep track of what is considered taxable vs not taxable and report it correctly on the 1099 sent at the end of the year
So likely the difference between the actual cash value of the fund and the death benefit value would not be taxable?
Yes, the value of the death benefit would not be taxable
The value of the death benefit or the value of difference in stated death benefit, that has rolled up 5% a year, and the actual cash value of the fund based on market peformance?
The difference of the stated benefit and actual cash value of the fund
And that would be considered by irs to be the death benefit that would not be taxed?
That is correct
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