Is Your OPEB Trust Trustworthy? Ask these three questions to find out…

Categories: National Developments,New England Developments,OPEB/GASB 45/75,PARS News
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Are you considering establishing a trust to set aside funds to manage and reduce your OPEB (retiree healthcare) liabilities? If so, it is important to set up the trust in the right way – to make sure it is compliant with the IRS, federal accounting rules (GASB) and state laws.

In order for assets to reduce liabilities on financial statements, diversify investments, and increase the discount rate on actuarial valuations to bring down liabilities, public agencies must ensure their trusts are set up correctly by asking three questions:

  1. Is the trust compliant with state law?

Adopted by ordinance or resolution, assets should be invested in accordance with the Prudent Investor Rule

  1. Is the trust compliant with GASB?

Contributions are irrevocable, used solely for OPEB and free from creditors

  1. Is the trust compliant with IRS laws?

Ensure the trust has IRS approvals with a Private Letter Ruling (PLR) which provides immediate and guaranteed tax-exempt status on investments earnings

There are many factors to consider when setting up a trust, and this is where PARS can help.

The PARS OPEB Trust Program meets all of these requirements and has helped over 450 local governments address their retiree healthcare liabilities since 2004. Working in collaboration with Vanguard and U.S. Bank, PARS offers a full-service, comprehensive approach to funding OPEB, by providing trust administration, trustee, custodian, legal compliance, investment advisory and investment management services to ensure your trust is set up and managed correctly.

For more information, please contact: 

Maureen Toal
Executive Vice President
(844) 540-6732