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Guest Bev

VEBA Question

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Guest Bev

Are there regulations that govern the types of investments that a VEBA may hold? Are mutual funds an acceptable investment option? The VEBA is for a governmental agency. Thanks.

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A VEBA is a tax exempt orgainizaton under IRC 501©(9) and is subject to the rrestrictions on conflict of interest, related parties, UBIT, etc for an any TXO. A Government plan would be subject to any restrictions on investing by a government plan under state laws as well as state law restrictions on investing by non profit organizations.

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In addition to the comments by MBOZEK, I would like to point out that the VEBA may be used for funding a welfare benefit plan that is subject to ERISA. If so, the ERISA fiduciary standards (prudent man, diversification, prohibited transaction) would also apply. And of course, no participant loans.

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