Non-exempt welfare fund held to the same non-reversion of assets requirement as VEBA trust

Article Abstract:

The IRS ruled in PLR 9628022 that a trade association's welfare benefit plan would be subject to the 100% private inurement excise tax if assets reverted to participants despite the fact that the plan did not qualify as a voluntary employee's beneficiary association (VEBA). The IRS did approve the plan's decision to transfer assets upon its termination to a charitable organization not otherwise affiliated with the plan. The 100% excise tax was enacted to ensure that VEBAs and other welfare benefit plans are not used to defer income and provide substantial deductions.

Business Associations, Trade Associations, Compensation and benefits, Trade and professional associations, Professional associations

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Transfer of surplus from terminated retiree life insurance plan to VEBA does not trigger excise tax

Article Abstract:

The IRS in Letter Ruling 9740024 allowed with no adverse consequences the transfer of surplus funds from a company's terminated life insurance benefit plan for retirees to a voluntary employee benefit association. The company was attempting to provide cost-effective welfare benefits to its employees and made the questionable transfer in good faith and in the employees' best interests. No negative consequences under IRC sections 501(c)(9) or 4976 would attach to the transfer.

Life insurance, Excise taxes, Excise tax

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DOL grants past and future exemptive relief allowing US West to pre-fund VEBAs with employer securities up to 25% of plan's assets

Article Abstract:

US West, Inc. was provided with ERISA conditional exemptions by the US Labor Dept (DOL) under IRC sections 406(a)(1)(E) and 407(a)(2). The DOL issued the multistate telecommunications company Individual Prohibited Transaction Exemption 98-51 which concerned three voluntary employees' beneficiary associations used to fund welfare benefit plans.

United States, Employee Benefits & Services, Finance, Human resource management, U S WEST Inc., USW, Employee benefits

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