Guest Penelope Posted October 13, 2008 Report Share Posted October 13, 2008 A client is considering participating in CALGOVEBA, a multi-employer trust that allows participating agencies to maintain separate asset pools to pay retiree health premiums and to reimburse medical expenses of retirees. The program provides for employer contributions and for pre-tax employee contributions that are described as "mandatory," because they are required pursuant to collective bargaining agreements (MOUs). So far, so good. However, CALGOVEBA has advised employers that the MOUs may require a minimum pre-tax payment of all bargaining unit members and permit members to elect to make pre-tax contributions at a higher level of contribution. Their position apparently is that since pre-tax contributions in general are required by the MOU, permitting individuals to choose higher contributions does not create a problem of individual choice under section 105. The VEBA has a favorable ruling on its tax status under section 501©(9). It does not have a ruling on the tax consequences to participants under section 105. My view is that offering individual bargaining unit members the chance to elect among various contribution levels results in inclusion of those higher contributions in taxable income. Anyone have experience with CAGOVEBA or have any thoughts on my analysis? (I'd be happy to be wrong!) Link to comment Share on other sites More sharing options...
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