Ron Snyder

1. Such a plan is required to file for each year up to and including the year in which the assets are distributed. [Note: if the plan was terminated 10 years ago with no remaining participants, the trust became a "wasting trust", which requires that all remaining assets be distributed within one (1) year.] 2. The form to file would be the 990-EZ, and yes you can e-file it. In fact, e-filing is required. 3. No, a welfare benefit plan may not be merged with a retirement plan of the same entity, nor can such assets be rolled over into a retirement plan. Presumably the grantor (sponsor, maker) of the trust was an active business. Is it still in business? Does it have current employees? Leaving this situation for 10 years could hardly be called "benign neglect". It is more like a festering sore that will not get better on its own, and will require regular (at least annual) attention until dealt with. The trustee has legal duties imposed by law as well as those imposed by the trust document (indenture). One of those duties under IRC 501(c)(9) is that benefits may be paid only to or for the benefit of employee/participants. How do you propose to get the funds out of the trust?

I was looking for software solutions and just found your post. Clearly ASC and Datair have complete systems and I have worked with them both. The FIS Relius system should also be a complete system, but I have only worked with their document generation system. ftWilliam is limited to "compliance and proposal" software. It works fine. In addition: Gabriel Roeder Smith offers a system but it appears to be DB only. (https://www.grsconsulting.com/db-plan-adminstration-services/) Here is interesting information about the "Top 10 Pension Administration Software Vendors". They all appear to be geared either to multinational corporations or to government pension systems. (https://www.appsruntheworld.com/top-10-hcm-software-vendors-in-pension-administration-market-segment/) "Other Pension Administration software providers included in the report are: 2Interact, Inc., Avenu Insights & Analytics, CentralSquare Technologies, Cornerstone OnDemand, Culture Amp, DEEP POOL Financial Solutions (ex. Kroger, Inc.), Duzon Digitalware, Execupay, Hilan, HITS Solutions, LRS Retirement Solutions, Lynchval Systems Worldwide, Inc., Malam PayRoll, Milliman Marc, O.C. Tanner, PDS, Qualtrics, Reward Gateway (UK) Ltd., Zellis (ex NGA Human Resources UK & Ireland), PlanSource, Paycom, SYNEL, SS&C Technologies, TotalSoft, UNIT4, UKG, Visma, Version Systems Private Limited, Workhuman, Workday, and others."

This is a knotty problem. Under ERISA, a fiduciary's duty is to all participants. That includes those who have left as well as those who are remaining. And any one of them could sue you if you do anything other than distribute the funds to participating employees on a logical and equitable basis, presumably in the form of welfare benefits. That said, so far all participants' expectations have been met, or will have been met. There is no reason to expect that any of them is likely to sue unless, of course, they get wind that you ended up with some extra funds. Choices you may not have considered include: (1) Giving the excess funds to charity (Maui or Ukraine, for example); (2) Purchase some sort of welfare or fringe benefit program which can cover all participants (including those who have left). I suspect that you could purchase a "travel accident", "air ambulance", "travel interruption" insurance or some combination thereof, for all of the participants to cover them for the next 5 years, for example.

The method suggest by C.B. Zeller may not be a reasonable method. Minimum funding standards for plans are determined under IRC Section 412 and deduction limits are imposed under IRC Section 404. Neither of those sections is related to the separate accrued benefit and vesting calculations under IRC Section 411. Since an actuary has to provide the 412 calculations for the plan and sign Schedule SB, it will be easy for the actuary to calculate the contribution split you need. Of course, if the actuary provides a complete actuarial report it will show the basis for the minimum and maximum contributions and some combination of those numbers could reasonably be used by a layman to make that calculation. Contributions will be allocated based upon the 412 minimums (for example) up to the total minimum contribution, and any excess will be allocated based upon the difference between the minimum contribution and the actual contribution made.

So why not start a new 501(c)(3) org. and pay for the apprenticeship training through the VEBA until the funds run out?

Jayh - Your latest post is unrelated to the current thread and should have been posted under a new thread. How to proceed is a question which cannot be addressed without additional information. Do they share a self-funded health plan? Or some other type of welfare benefit plan? They will need legal representation to devise a strategy, and probable will need to consider state law considerations (since the DOL has allowed states to regulate MEWAs) as well as ERISA considerations. Some states specifically allow such 2-employer plans and do not make them go through all of the MEWA filings. I believe that step 1 should be to get them out of the untenable situation they are in ASAP. There are multiple ways this could be accomplished. Step 2 is to make a decision on what to do about being out of compliance for 10+years. If this was never offered to the public, the authorities will likely have a major concern other than having them cease and desist from violating the law. There will likely be some penalties imposed by the EBSA. Some non-attorney advisers would suggest deep six-ing the whole thing and hope not to get caught.

The question is, who owes the tax? The tax is assessed against the VEBA trust. The question, therefore, should be, could anyone other than the VEBA trust pay Unrelated Business Income Taxes which are due? And the answer is no. https://www.irs.gov/charities-non-profits/unrelated-business-income-tax

Depending on the sponsorship (employer, union, or joint committee), it may or may not be easy to add a retiree life plan to an existing VEBA. The degree of difficulty depends upon the politics of the process and the number and types of parties involved who have to sign off. Key considerations include answering the question, what advantage is there in running a current cost plan through a tax-exempt trust? Will the trust be accumulating amounts currently for future plan/tax years? The legal, accounting and investment expenses could be significant whether the benefit is provided directly by the employer or through a VEBA. The costs would not be appreciably higher because this is done through an existing VEBA. I suspect that you are leaving some essential information out of your question.

You did not clarify whether this was a state court proceeding or a federal court case. There are several alternatives available to your client: Close down the VEBA; Pay the loan interest directly rather than through the VEBA; Appoint the client as the trustee; Transfer to a more flexible trust not under the court's control; etc.

I just discovered that you received no responses to your question from 2 years ago. I hope you also contacted an ERISA attorney with your questions and got you answers. In case you did not, here are preliminary answers: 1) Probably yes (based upon a ruling from the early 2000s), and 2) Maybe, but (you had better be able to defend your actions against other beneficiaries). Let me know if this is a live issue.

There are special sets of rules which apply to multiple-employer welfare benefit plans ("MEWAs") (which likely don't apply to you), VEBAs (which may apply to you if you choose to use a VEBA structure), to multi-employer welfare benefit plans (which likely do apply to your situation), to collectively-bargained benefits (which likely do apply to your situation), etc. I have established VEBAs on behalf of several unions, typically public safety employees, teachers, etc. The primary reason for creating such plans has usually been because there is a gap between the employer's health plan and Medicare for those who are eligible to and desire to retire before their Medicare eligibility date. In such situations, my fees, including travel, meetings, consulting time, question and answer sessions, drafting of documents, submissions to IRS (for VEBAs) and US Department of Labor, have been in the range of $5,000 to $12,000, plus government filing fees. You weren't in the ballpark. I have actively participated in the American Bar Association, Section of Taxation, Employee Benefits Committee and the Welfare Benefit Plans subcommittee and could (at no charge) refer you to an attorney who specializes in this area of law. If you would like such a referral, simply let me know.

Some recent news on the VEBA front which doesn't seem to appear in these boards: http://www.thinkadvisor.com/2015/02/18/fiduciaries-to-pay-39m-for-raiding-death-benefit-p https://www.courtlistener.com/opinion/2898304/odc-pet-v-john-j-koresko-v/

The "insight" you need is implicit in your posts. The solution is to make it a "plan MEWA" so that you don't have to file the 5500 for each employer individually.

The real question is whether or not the plan is created pursuant to a CBA. You have already acknowledged that it is not. What are the chances of having it written into the CBA on the next go-around? It the local doing this against the wishes/policy of its national union? If so, they are in dangerous territory. That is tantamount to trying to break off from the national union. 1. For now, the plan definitely would be a MEWA in that it would cover employees of multiple unrelated employers. This means that it is acting as an insurance company and would have to be licensed to provide such coverage by the states in which it is operating. Several states would require full insurance company licensing, while others have relaxed licensing requirements for MEWAs. If they are operating in a single, MEWA state, it may be doable. If not it is likely prohibitively expensive to undertake. [Note: MEWAs must comply with both US Department of Labor requirements as well as state laws.] 2. Yes, it could be integrated with the multi-employer HRA.

The 3-state safe harbor rule was issued after the IRS lost a Court of Appeals case against a VEBA operating nationally. They tried to establish a position which was not clearly in violation of that case but which gave them the ability to continue to regulate geographically. Based upon the proposed Regs., we have obtained determination letters with respect to VEBAs which operate in 3 or fewer states. There is no harm in submitting the proposed trust for a D-letter. Clearly other, more important, legal and regulatory issues exist with respect to these trusts, so be careful.

The simple answer. There are multiple ways of getting out of a welfare benefit plan, but none of them involve a reversion of the assets to the employer, which would be required to get the policy into a NQDC plan. I am curious as to why you would want to?

It seems like it would be easy to characterize such arrangement as an insured plan and not as a MEWA but as an insurance contract. Has the policy been filed with the states which require it? (Some states require privately issued policies to be filed, while others don't). Have you spoken with the regulators in your state? This seems like a good place to start. Some insurance departments treat NAIC like it is their boss and others look at their model laws and think, "Well, that's one way to do it." A review of other NAIC model laws will show many implementations of all or part of the model law based upon their own values and perspective.

What, no takers? 1. Divorce of employee or owner; 2. Prohibited transaction; 3. Investment losses; 4. Splitting of plans with transfers; 5. Attempted termination of underfunded plans.

No, because 414(q) refers to compensation from an "employer" (which means one company and all others in the controlled group or affiliated service group).

GBurns is correct, the trust arrangement is secondary. GIAs are not exempt from state regulation: each employer is potentially subject to regulation by the state where coverage is offered. (And most states require that such coverages be offered by insurers licensed as such in their jurisdiction.) The type of trust is irrelevant, whether it is a grantor trust, a common-law trust, a statutory trust, a section 115 trust (for governmental groups) or a VEBA trust. Even tax-exempt VEBA trusts are actually subject to income taxes for unrelated business taxable income and IRS has aggressively gone after such arrangements.

Of course. What does the CBA state? It may need to be modified.

1. IRC §505 contains tests which apply to all plans, as do §§419 and 419A. Other tests are created by the authorizing Code section including §§79, 105, 125. Others are created by Regs (ie, split dollar). 2. Not all tests are discrimination tests, and some of those that are specify Key Employees rather than Highly Compensated Employees or Highly Compensated Individuals (which you seemed to lump together). 3. See IRC §414(q)(1)(B). Latest update is found here IRS Limits. 4. Preliminary testing is done prior to the end of the year (to facilitate any changes needed) and after the end of the year when payroll information is finalized and before refunds of excess deferrals have to be made timely. 5. No way to endorse someone on a public bulleting board, but there are responsible and capable providers all over the country. Do some inquiring locally in the nearest big city (1 M population or more). 6. Of course. If all employees actually receive same coverage (ie, cannot elect less to avoid taxable income) it would automatically pass the uniformity part of the test. However, a participation test may still be needed unless all employees are automatically enrolled at exactly the same time.

(noises: closing door, drawing shades, checking for bugs) When did you want them to be performed?

Good comments by Chaos. Every VEBA trust I have read contains termination and wrap-up language, usually generic, that requires that all assets be used to provide benefits. Is the VEBA running out of money because of something the Trustees did or failed to do? Are they indemnified under the trust?

Chaos is correct. The only "flow-through" for a VEBA would be excess amounts under IRC 419 which are imputed as income to the sponsoring employer (in the case of a non-collectively-bargained plan.