Originally Posted by
APC225
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.
A lot of people have heartburn over the fact it goes back to the pool if there is no spouse or eligible dependents, but to me the tax free nature of the plan more than outweighs it. It’s a pretty good deal.