Is a VEBA a non_qualified plan?
No, not as that term is generally used. A non-qualified plan is usually a pension or deferred compensation plan which is set up for key individuals only. Under a non-qualified plan, employers are generally not entitled to deductions for contributions until an employee receiving benefits has to take them into income. Under a qualified plan, contributions are currently deductible, and the employee does not have a tax consequence until the benefits are received. The guidelines for VEBA contributions and benefits are similar to the rules governing qualified plans. A VEBA is “non-qualified” only to the extent it does not have to comply with rules governing “qualified plans” as defined in the Internal Revenue Code. It is more precise to say that a VEBA is “exempt” when it qualifies as a trust described in Section 501(c)(9) of the Code.
