Why cant people decide if they want to participate individually in the VEBA plan, instead of forcing everyone into the plan?
The “all or none” comes from IRS rules. VEBA Medical Expense Plans were created by the governing bodies, but they must comply with tax laws. The IRS very clearly states that if you give employees the choice of receiving cash or having a benefit, then that benefit/cash must be taxable as income. The only way to protect the tax status of the VEBA account is to make it such that employees don’t have the option and/or choice to receive cash. Therefore, we can create a VEBA MEP, and allow people to vote participation in (or out), but once it’s voted in, all employees must participate. In other words, you cannot provide a tax free benefit without making everyone participate. The whole benefit of the VEBA-MEP is the tax protection. In the past, if you were to retire from the University, you could cash out your sick leave, but it would be taxed at 25%. So, you lose 25% of the 25% cash out. The VEBA MEP accounts were created, because it was presumed that the majority of people who were retiring
Related Questions
- Why can’t people decide if they want to participate individually in the VEBA plan, instead of forcing everyone into the plan?
- Why cant people decide if they want to participate individually in the VEBA plan, instead of forcing everyone into the plan?
- Can an employee decide not to participate in the plan?
