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A Retiree Medical Savings Account Plan (RMSA) allows active
full-time employees to save now for the future cost of retiree health care.
The employer may choose to make a matching contribution to an annual maximum
selected by the employer. Employee contributions to the plan are made with
after-tax payroll deductions. The employer determines the maximum an
employee may save each year. Employee contributions are after-tax; the
earnings are tax-free and earnings on the Match Account are tax-free.
The employer determines a minimum contribution per pay
period. Employees must sign up for the entire year. Money in the
Employee Account always belongs to the employee, even after employment
terminates.
The RMSA offers a number of advantages for employees:
- Automatic
after-tax payroll deductions give employees a convenient way to save.
- Employee
contributions are placed in a secure trust account, known as a VEBA
(Voluntary Employee Benefits Association). The federal government audits the
trust.
- Accounts
are valued each quarter.
- The
plan trustees, with the goal of stable returns, invest funds.
- The
employer makes a matching contribution, up to a selected amount per year,
for eligible full-time employees.
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