VEBA reimburse Employer for Benefits paid by Employer

[tsrl01]

For various reasons (increase in retiree contributions, splitting off of some benefits such that not paid through the VEBA), the VEBA has accumulated some money (unbeknownst to anybody except the accountants). Now we are trying to figure out a way to get the money out of the VEBA. It seems that it would be acceptable for the VEBA to "reimburse" the employer for benefits/premiums paid by the Employer for the provision of benefits to participants that could have been paid by the VEBA... is this correct? I assume there would need to be some sort of documented agreement to demonstrate the proof of the reimbursements, etc? Any help/guidance would be appreciated! Thanks!

[J Simmons]

For various reasons (increase in retiree contributions, splitting off of some benefits such that not paid through the VEBA), the VEBA has accumulated some money (unbeknownst to anybody except the accountants). Now we are trying to figure out a way to get the money out of the VEBA. It seems that it would be acceptable for the VEBA to "reimburse" the employer for benefits/premiums paid by the Employer for the provision of benefits to participants that could have been paid by the VEBA... is this correct? I assume there would need to be some sort of documented agreement to demonstrate the proof of the reimbursements, etc? Any help/guidance would be appreciated! Thanks!

I would not do this. The situation you posit suggests that the ER paid those expenses thinking it was bearing those expenses, and not thinking it would be reimbursed by the VEBA. That is, the ER was the payor, not just a conduit for payment. So what you are suggesting looks to me like using the VEBA assets for the ER's benefit. I think it might be a different matter if you have evidence that already exists that the VEBA trustees told the ER that the VEBA had no such funds to pay the benefits in question, so then the ER stepped in and paid them. In that instance, both the VEBA trustees and the ER were acting under the same misunderstanding. Borrowing the mutual mistake of fact concept from the world of contract law, this might allow the VEBA to reimburse the ER.