May an employer create a VEBA and immediately fund it before any claims for benefits have been "incurred by not paid"? Is this contribution deductible by the employer? Everything I have read on the contribution and deduction limits speaks in terms of contributions made at the end of the taxable year. But my client wants to create the VEBA and immediately make a contribution. Any help would be greatly appreciated!
Don Levit
Sep 7 2006, 04:04 PM
cjt:
You may want to be more acquainted about VEBAs by looking over this IRS link.
Go to:
http://www.irs.gov/irm/part7/ch10s12.html.
Don Levit
GBurns
Sep 7 2006, 11:55 PM
If there are employee contributions, What would you do with them in the period between the salary reduction and the claims submission?
How would you timely pay claims if the money was not set aside prior to claims submission?
If you are going to operate in what is essentiallly a "pay as you go manner" Why would you need a VEBA?
A primary purpose of a VEBA is to have a secured vehicle holding the funds to ensure that the funds are available when needed. If there are no funds to hold securely, then there is not much use for the VEBA.