| |
| |
 |
| |
 |
|
|
Advantages of the Cambridge Trust |
|
| |
- Allows Employers to provide economic security for their employees on a cost-effective and selective basis
- Contributions can be made in good times to fund a reserve for trying economic times
- Funds are held in a major money center bank
- Plan funds are secure from the hands of creditors, personal as well as corporate
- Contributions may vary from year to year (subject to “qualified cost”)
- Funds inside the Plan can accumulate tax-free
- Death proceeds can be received by the next generation income, estate & gift tax free
- Benefits can be provided on a selective basis
- No need to provide benefits to rank and file employees
- There is no vesting of benefits for employees who terminate prematurely
- Contributions to the Plan are not limited by qualified plan rules and will not interfere with the funding of pension, profit-sharing or 401(k) plans
- No 10% penalty for “early” or “late” distributions
- Not subject to ERISA rules
- Not subject to VEBA nondiscrimination rules (no post-retirement life insurance or other benefit may be made available)
- Not limited by VEBA compensation caps
- Not subject to 419A(f)(6) rules or scrutiny
|
|
|
A comparison of Cambridge Trust and VEBA Plans |
|
|
Features
|
|
|
VEBA Plans |
|
|
Cambridge Trust |
|
Discrimination Rules
|
|
|
Nondiscriminatory |
|
|
Selective |
|
Types of Benefits
|
|
|
All health and
"welfare benefits" |
|
|
All health and
"welfare benefits" |
|
Reversion to employer
|
|
|
None allowed |
|
|
None allowed |
|
Benefit based on
formula of compensation
|
|
|
Necessary |
|
|
Not necessary |
|
Compensation Limit
|
|
|
$200,000 |
|
|
No Formula limit or cap |
|
Tax exempt trust
|
|
|
Yes |
|
|
No |
|
ERISA Plan
|
|
|
Yes |
|
|
No |
|
Vesting of Benefits
|
|
|
No |
|
|
No |
|
Assets exempt
from creditors
|
|
|
Yes |
|
|
Yes |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
