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Disability Taxation Continue with Survivor?


Kelly
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Hello,

Would a surviving spouse be eligible for the same tax exemption as the duty disability retiree? I see all kinds of documentation referring to federal tax exemption to the disability retiree but nothing referring me to how taxation works for the person picking up the pension after the death of the disability retiree. 

I was given a copy of PLR -167262-03 within it "...the benefits received by the surviving spouse  or dependent minor children of a recipient who was receiving service incurred benefits are also excludable from gross income...." 

Thanks!

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Kelly, you're talking about the 104(a)(3) exclusion for a governmental plan? Sure. See Treas. reg. 1.104-1(b), second sentence. Beneficiary could also exclude if a death benefit for an on-duty death.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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