Lance Wallach is a pension expert who has written and spoken extensively on the benefits of a VEBA. I recently had the opportunity to be on a conference call with him and Tim Metz, CPA. Mr. Wallach explained the benefits of a VEBA under IRC 419(e). There are huge advantages with this type of plan as compared with a 401(K). There are no contribution limits on a VEBA, you can set variable vesting times, withdrawals at any time are tax-free as long as the money is spent on the employee’s health and welfare, and post-retirement medical expenses can also be funded.
Mr. Wallach’s company sets up and administers the VEBA plans with the help of CPAs and attorneys licensed in the state where the business is located. The typical set-up fee is between $6,500 and $10,000, all of which is tax deductible. The set-up fee depends upon how much tax planning the business wants. For example, the VEBA can be used to fund a buy-sell agreement, or the VEBA beneficiary can be a life estate set up to avoid probate.
There may be tremendous benefits to profitable businesses with two or more key employees to use a VEBA to fund a buy-sell agreement, and the funds contributed for the buy-sell agreement are deductible going in and tax-free coming out. The VEBA also offers almost unlimited opportunities to fund employees’ health and welfare benefits which are also deductible going in and tax-free coming out. I can provide you with more information about VEBAs or you can visit Mr. Wallach’s website and read the numerous publications he has written on the subject.
About the author
Jo Ann Joy is the CEO and owner of Indigo Business Solutions, a legal and business consulting firm. Indigo Business Solutions is a “one stop shop” for small businesses, because we offer both legal and business services. We can provide the professional services that a business requires, and they won’t have to be “referred out” and pay another professional.
Jo Ann has a law degree, an MBA, and a degree in Economics, but she is not a traditional attorney. Rather, she is a strategic business attorney who works closely with clients to greatly improve their performance and chance of success. Her background includes commercial, corporate, contract and real estate law, and she has experience in accounting, financial planning, mortgages, marketing, product development, banking, and business planning and strategies. She ran a successful business for 10 years, and she has written and given presentations on many different legal and business subjects.
If you want to achieve more with your business or you want free copies of my articles, please contact me.
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