Groom principals Louis Mazawey and Kathryn Bjornstad Amin recently recommended that the Internal Revenue Service (“IRS”) issue published guidance in a critical area affecting VEBAs with surplus retiree health plan assets.  Specifically, they recommended official IRS guidance confirming that the 100% excise tax on “reversions” under IRC section 4976 does not apply when such surplus assets are repurposed to pay active employee health or other welfare benefits.

Groom has assisted a number of clients in navigating the tax and ERISA issues in these transactions, but the draconian excise tax continues to complicate effective planning strategies, especially since this has been a “no rule” area for the last two years.


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