Originally Posted by
LJ Driver
Do you guys know the tax implications or rules for passing on the RHA to family members after the pilot dies? The rules for a Roth and 401K are pretty clear but I haven’t been able to find much about the RHA piece. It does sound like an awesome investment vehicle with the triple tax advantage.
It can be used by a spouse or IRS-defined "dependents" but is not inheritable in the estate. That’s why it can exist—the funds are part of a VEBA, Voluntary Employee Benefits Association, a carved out area of IRS rules that allow company contributions beyond the 403b limit because the funds aren’t owned by an individual, but by a group. However, contributions are tracked and designated for the individual, spouse and dependents. If there are none of those, the funds belong to the association, not the estate.