Carol V. Calhoun Posted January 6, 2021 Share Posted January 6, 2021 Employer has a health plan, and a VEBA. The VEBA permits use of VEBA assets to fund health benefits. However, the health plan is not insured. Rather, a vendor requires that a reserve fund be set up. That fund is used for health benefits, and must be replenished as it is used for that purpose. The vendor will only accept amounts sent by wire transfer. However, the bank that holds the VEBA account will only send money by checks. (This strikes me as odd, but that's the facts we have.) Employer would like to have the VEBA write a check to the employer, and the employer would immediately contribute the funds to the reserve fund by wire transfer. However, for some brief period of time, the money would be in the employer's hands. Has anyone seen the IRS argue that this is an impermissible inurement? Employee benefits legal resource site The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances. Link to comment Share on other sites More sharing options...
Peter Gulia Posted January 6, 2021 Share Posted January 6, 2021 While I’ve advised regarding a VEBA, I haven’t faced a situation of the kind you describe. In other situations, I’ve seen reasoning that a trustee may act through an agent. But a good agent segregates her principal’s assets from her personal assets. Before using the workaround, the VEBA trustees might consider how they would prove: that the employer/agent could not use the VEBA trust’s money for anything beyond the VEBA’s purpose; or that there were prudent controls for the trustees to detect the employer/agent’s bad act, and fidelity-bond insurance or other ready means to recover what’s stolen or misused. Might it be quicker for the VEBA trustees to select a bank with the needed wire-transfer services? Or to select a TPA that accepts the trustees’ check? Axel and Luke Bailey 2 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
BG5150 Posted January 6, 2021 Share Posted January 6, 2021 Could the employer open an account solely for the use of these funds and institute a policy that within a certain time of the account being funded, a wire will be issued to the reserve fund? Luke Bailey 1 QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Luke Bailey Posted January 6, 2021 Share Posted January 6, 2021 7 hours ago, Peter Gulia said: Might it be quicker for the VEBA trustees to select a bank with the needed wire-transfer services? Or to select a TPA that accepts the trustees’ check? Or make someone at the employer a co-trustee just of the assets occasionally transferred to it, with the trust addendum describing the arrangement, the scope of the trustee's responsibilities, the segregation of assets in an account in the trustee's name, etc.? Axel 1 Luke Bailey Senior Counsel Clark Hill PLC 214-651-4572 (O) | LBailey@clarkhill.com 2600 Dallas Parkway Suite 600 Frisco, TX 75034 Link to comment Share on other sites More sharing options...
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