Guest Patriot190 Report post Posted January 13, 2011 An actuary informed a client that the non-Union VEBA investment income is taxable, whereas the Union VEBA investment income is not. For purposes of Financial Statement preparation, the expected long term rate of return of the VEBAs will be reported separately if the VEBAs are taxed differently. I can make no sense of this actuary's statement. Would anyone please shed some light on this issue? Many thanks! Share this post Link to post Share on other sites
vebaguru 4 Report post Posted January 18, 2011 VEBAs are tax-exempt entities but are subject to UBIT on their investment earnings. Collectively-bargained VEBAs are not subject to UBIT. Share this post Link to post Share on other sites
Guest Patriot190 Report post Posted February 1, 2011 Thank you for this information. Would you be able to provide a citation to support what makes collectively bargained UBIT different from non-collectively bargained UBIT? Thanks again for your insight! Share this post Link to post Share on other sites
Guest Leo the Lion Report post Posted February 2, 2011 See the specific UBIT provision at IRC section 512(a)(3)(E)(i), which cross-references the account limit determined under IRC section 419A. This provision of 512 effectively applies UBIT to VEBA assets in excess of the applicable 'account limit' as determined under IRC section 419A. Under IRC section 419A(f)(5)(A), no account limit applies to bargained VEBAs. Consequently bargained VEBAs do not have assests in excess of the account limit. In theory, (and under some PLRs) a bargained VEBA could exceed the account limit, but only if the assets in the bargained VEBA were to exceed the present value of all future benefits. But that's another matter. Share this post Link to post Share on other sites
Guest Patriot190 Report post Posted February 2, 2011 Thanks Leo. This is helpful. Share this post Link to post Share on other sites
