VEBA's distribution of funds to participating employers to pay future insurance premiums does not constitute reversion

Article Abstract:

This article describes the IRS's position in Private Letter Ruling 199916054 concerning the treatment of a voluntary employees' beneficiary association's (VEBA's) distribution to employers which were to use the funds in the future to purchase insurance premiums for the terminating VEBA participants. The IRC section 4976 excise tax would not be applicable and the section 501(c)(9) tax exemption would still apply. The application of the ruling may be limited due to ERISA requirements in other fact situations.

United States, Tax Law, Public Finance Activities, Insurance, Insurance Carriers and Related Activities, INSURANCE CARRIERS, Employee Benefits & Services, Finance, Human resource management, Employee benefits, Excise taxes, Excise tax

---

Master trust comprised of defined benefit plans and VEBA not tax-exempt under S501

Article Abstract:

The IRS has issued GCM 39873 stating that a master trust composed of defined benefit plans and a voluntary employees' beneficiary association (VEBA) trust is taxable. While the VEBA remains tax exempt on its own, the master trust does not qualify for exemption under section 501(a). The pooling of different benefit plans to maximize investment profits has been hurt by this GCM and corrective legislation could be needed.

Pension funds, Defined benefit plans, Tax exemption, Tax exemptions

---

IRS approves transfer of retired life type reserves to VEBA

Article Abstract:

The transfer of retired lives reserve accounts to a voluntary employees' beneficiary association is nontaxable, according to IRS Private Letter Ruling 9206030. The IRS ruled that the 100% prohibited transaction excise tax was not necessary because of an insurance policy provision that forbade any reversion of the amounts to the employer as long as any of the employees or retirees were still alive.

Life insurance

Similar abstracts:

• Abstracts: The misuse of integration, no representation, and no reliance clauses in the name of contract certainty
• Abstracts: Administration of a business interest held by an estate or trust. Conservation easements help preserve real estate for an owner's family
• Abstracts: Cop's second trial in L.A.; judge who sent King beating trial to Simi Valley denies venue change. Firings to continue; survey shows 86 percent of large law firms planning associate layoffs
• Abstracts: Prop. regs. require that employers notify participants and PBGC of name of insurer selected to provide annuities on termination of defined benefit plans
• Abstracts: Extradition reopened; Justice denies it withheld evidence about Ivan the Terrible. Final justice; limiting death row appeals

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.