If you have been following this series, you will recall that we are looking at a series of questions intended to assist in making decisions about funding retiree Healthcare Plan aka OPEB plans. This week we consider the question:
If the recommended contribution is $-0-, may benefits be paid from the OPEB plan trust?
Yes.
It is important to be aware of the types of investments held in the OPEB trust. Unless a portion of assets are already in a checking or other readily liquid account, if assets are not readily liquid – that is, not easily available from which to pay retiree healthcare benefits – care must be used when taking assets from the plan. Unrealized losses can quickly become realized if liquidating in a down market.
Consult with your investment advisor to establish a strategy for paying benefits from plan assets. Changes in the investment strategy could result in lower-than-expected returns on investments that could impact the funded status of the plan and could require additional funding.
Read the rest of the OPEB series:
- Part 1: Contributions To And Benefit Payments From Retiree Healthcare Plan Assets
- Part 2: Contributions to and benefit payments from Retiree Healthcare Plan Assets – What does it mean that a plan is 100% funded?
- Part 4: Contributions and benefit payments from Retiree Healthcare Plan Assets – What other funding consideration should be kept in mind?
