What happens when an employer terminates its participation in a VEBA plan?
Value in the plan is distributed pro rata among the current plan participants. The benefits based upon each participant’s cumulative salary during his or her plan participation when weighted against total salaries paid to current plan participants during the plan’s life. The benefits are taxable, as ordinary income, in the year they are received.
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- What happens when an employer terminates its participation in a VEBA plan?