How do the medical benefits work?
Funds are deposited into the employer’s trust deductible Employer contributions. These funds are then used to purchase policies which accumulate cash values tax free. When medical expenses are incurred, a request for payment is submitted to our plan which processes the claim for payment by the Trust from the Employer’s Plan. Such payments are generally not taxable when paid. Our plan provides the Employer and the Participant full reports for all transactions.
How do the life insurance benefits work?
Life benefits are provided as individual life or survivorship life benefits funded by Trust owned policies which may provide estate and income tax free benefits to the recipient when set up properly. Typically universal life policies (either fixed or variable) are used to accomplish this, and the cash values within the policies are used to fund the post retirement medical and other selected benefits. These policies are generally portable. Table 2001 costs and PS-38 costs are passed on to the Employee as appropriate. The individual Trust is the owner and beneficiary of all policies.
Can an Employer have our plan and a qualified retirement plan?
Yes. Our plan can be adopted alone, or may compliment new qualified retirement plan (or your current plan). Some Employers may wish to split their retirement contribution between our plan and their qualified plan. In some circumstances the contributions for some individuals may need to be coordinated between plans. Our plan provides this service for the Employer as part of its normal administration services.
What is the maximum contribution permitted?
This varies by the individual Employer’s circumstances, however frequently annual contributions of $50,000 (and sometimes more) are permissible. This calculation is provided for the Employer by our plan.
What is the minimum contribution?
There is no minimum required contribution. An Employer may decide to make a significant contribution on one year, and none in another.
However, contributions should generally cover the cost to keep insurance policies in force, must cover earned benefits, and make sense when considering the administration fees. Generally an annual deposit of $5,000 or more will meet this criteria.
What benefits are required?
No particular benefits are required. Often the combination of Post Retirement Medical Benefits and Life Benefits makes sense, along with some long term care funds, with a provision that the Post Retirement Medical Benefit funds are accessible for pre-retirement catastrophic medical events. This provides a good mixture of deductions, tax free benefits, while maintaining access to the funds for pre-retirement catastrophic medical expenses.
By when must contributions be made into our plan?
In order for contributions to be deductible for a fiscal year, contributions must be made by the end of that fiscal year. IT IS IMPORTANT TO NOTE THAT THERE IS NO GRACE PERIOD (e.g. 2 1/2 months after fiscal year end or due date of filing the business tax return).
