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IRS Issues Private Letter Rulings on Reallocation of VEBA Assets
The Wagner Law Group [Guidance Overview] Feb. 11, 2016 "IRS has released two PLRs regarding VEBA funds that were originally intended to pay for retiree health benefits but will now be reallocated to provide health benefits for active employees.... Employers interested in using this strategy, however, should keep in mind the following: [1] Legally, PLRs may only be relied upon by the recipient. [2] For ERISA-covered benefit plans, all affected benefits generally must be provided under the same ERISA plan (and the plan needs to permit reallocation) to satisfy ERISA's exclusive benefit rule. [3] Although, in the first PLR, the employer must recognize income under the tax benefit rule, this same amount may be deducted from the employer's income when it is used to fund active employees' benefits." [See PLR 201530022 and PLR 201532037.] |
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