4113 / What is a 501(c)(9) trust (“VEBA”)?

A Voluntary Employees’ Beneficiary Association (“VEBA”) is a tax-exempt entity created to fund life, sick, accident, or certain other benefits ( Q 4118) for members, their dependents, or their designated beneficiaries. A VEBA may be established by an employer or through collective bargaining. A trust created to provide benefits to one employee does not qualify as an employees’ association for purposes of exemption from federal income tax under IRC Section 501(c)(9).¹ Some of the requirements for tax-exempt VEBA status include:

(1)   Membership eligibility ( Q 4114);

(2)   Nondiscrimination ( Q 4115);

(3)   Entities and individuals entitled to maintain control over the VEBA ( Q 4116);
and

(4)   Prohibition on inurement of earnings for the benefit of private shareholders or individuals ( Q 4117).