This year I cashed out a PrinFlex life insurance policy from Principal. The Gross Distribution was $170k and change, while the taxable amount was $70k and change. The gross distribution shows up as income for the year and I am concerned that this will affect my Medicare payments in 2 years (IRMAA). The non-taxable portion is a partial reimbursement for premiums paid after tax. Why does it then show up as income?
