Terminating a VEBA

[Randy Watson]

An employer uses a VEBA as a funding vehicle for its health plan. The employer wants to keep the health plan in place but terminate the VEBA. Other than following the termination procedures in the VEBA trust document, using the remaining assets to pay health benefits and filing a final 5500, is there anything else that should be done?

[Lori Friedman]

A final Form 990 for the exempt organization.

[E as in ERISA]

Updating the SPD to communicate to participants that the plan is no longer funded by a trust.

Some don't actually terminate the trust. They might just amend to not allow it to be used for that purpose. They sometimes keep it to make sure that there is nothing else that they want to use it for (since they've received that exemption).

If appropriate, doing planning to make sure that it runs dry by year end so that you don't have the trust in existence for a few months next year. Otherwise you still need an audit next year.