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Fidelity Bonds


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Fidelity bonds are more geared towards covering employee dishonesty so Fiduciary Liability insurance might be more appropriate for fiduciaries and D&O (I think there is also Trustee Liability coverage) for Trustees.

So the VEBA buys Fiduciary Liability to ptotect itself from the Trustees and others, but it makes the Trustees buy Trustee Liability and the Administrators buy Fiduciary Liability.

I do not think anything is required unless the by laws say so, but prudence dictates that you get insurance.

You might want to get the differences from a good agent. Maybe 1 of our members with exposure to this issue will post.

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The VEBA is not a qualified plan, it is the plan that provides the underlying benefits that qualifies as either an "employee welfare benefit plan", a "welfare plan" or a "pension plan" etc.

The VEBA ( a Trust) is generally just the medium used to secure the payments and continuity of the underlying benefits.

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In general, Title I of ERISA applies to VEBAs. A VEBA is an employee welfare benefit plan that meets all of the statutory and regulatory requirements of I.R.C. Sec. 501©(9). ERISA's reporting and disclosure requirements, participation and vesting rules, minimum funding standards, and enforcement provisions affect VEBAs to varying degrees.

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Kirk, your clarification is noted.

A VEBA is an I.R.C. Sec. 501©(9) exempt organization that accumulates resources for the payment of certain welfare benefits. As a tax-exempt organization, a VEBA is subject to the Form 990 filing rules.

A VEBA isn't necessarily a trust. VEBAs are often formed as corporations or unincorporated associations. Because a VEBA may be subject to unrelated business income taxation on its non-exempt function income, it can be advantageous to use a form of entity other than a trust. Income is taxed at the corporate rates if the VEBA exists as a corporation or association, but at the higher trust rates in the case of a trust.

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