Life insurance distribution from a PSP

[Guest JohnSB]

If a participant has a life insurance policy within their Profit Sharing Plan and dies - and let's say the death benefit is $70K and the cash value at the date of death is $25K - would the difference of $45K be considered the tax free amount? Thanks!

[Bill Presson]

If a participant has a life insurance policy within their Profit Sharing Plan and dies - and let's say the death benefit is $70K and the cash value at the date of death is $25K - would the difference of $45K be considered the tax free amount? Thanks!

You are correct.