Voluntary Employees Beneficiary Association (VEBA)
Definition of "Voluntary employees beneficiary association (VEBA)"
Tax-exempt entity as qualified under Section 501 (c)(9) of the Internal Revenue Code. The VEBA usually provides its members and their dependents and beneficiaries with paid life insurance, health insurance, and accident insurance. The VEBA can be established by any employer for employees even if they already have a retirement plan. Employers are permitted to make tax-deductible contributions to the VEBA that is usually established as a trust with the bank acting as a trustee. Earnings build within the trust on a tax-deferred basis. If the VEBA should terminate, all of the VEBA's assets are distributed to the active participants in the VEBA as of the date of termination. Distributions to a VEBA participant are not required to begin by age 70M, nor is a penalty charged if the distributions begin prior to age 5914. Survivor benefits are received on an income and estate tax-free basis. Assets of the VEBA are exempt from creditors' claims. The IRS code requires that the VEBA must have at least two participants (one of the participants can be a spouse); benefits must be based on annual compensation as well as age; and all full-time employees who are at least age 21 and have at least three years of full-time service must be allowed to participate. The employer can terminate the plan at any time.
Popular Insurance Terms
Provision that holds a re-insurer liable for its share of losses even if the ceding company becomes insolvent before paying these losses. For example, XYZ Insurance Co. writes a fire policy ...
Canadian retirement plan much like U.S. individual retirement account (IRA). Here, an employee can contribute on a tax deductible basis C $3500 each year as a member of an employer pension ...
Buying a home or investing in a commercial property in the United States implies complex legal clauses. Perhaps one of the most perplexing ones is the noncontribution mortgage clause. If ...
Forced entry into premises. Coverage is provided under various property insurance contracts such as homeowners and special multiperil insurance (SMP). ...
Protection to maintain the value of a business in case of death or disability of a partner. Upon the death or long-term disability of a partner, insurance can provide for the transfer of a ...
Type of derivative traded on the Chicago Board of Trade that takes the form of an option on a catastrophe futures contract using a call-option spread as the basis for the contract. The ...
Plan initiated by the pension benefit guaranty corporation (PBGC) upon the involuntary termination of a pension plan. With the concurrence of the United States District Court, the PBGC ...
Automatic protection for an insurer against losses that exceed a predetermined loss limit. This reinsurance may be subdivided into three primary types: excess of loss, catastrophe loss, and ...
Form that provides insurance coverage for the insured in the event the damage or destruction of non-owned property reduces or terminates the insured's earnings. For example, if the insured ...
Have a question or comment?
We're here to help.