Zermatt Life/Health Insurance Trust

Key Features

  • Contributions are tax deductible
  • Growth of trust is tax exempt
  • Certain distributions are excluded from taxes

The Zermatt Life/Health Insurance Trust is a group insurance plan under which employers may elect to provide future welfare benefits for employees and their beneficiaries through a welfare benefit fund that complies with Sections 79, 101, 105, 419, 419A and 505 of the Internal Revenue Code.

The Zermatt Life/Health Insurance Trust emphasizes the following types of benefits:

  • Pre-retirement death benefit
  • Post-retirement death benefit
  • Retiree medical benefit
  • Health reimbursement account benefit

The Zermatt Life/Health Insurance Trust is generally appropriate for employers who desire to provide additional benefits over and above retirement benefits to their employees (and obtain additional tax deductions for providing such benefits). More and more frequently, professional corporations have adopted the Zermatt Life/Health Insurance Trust as a supplement to their existing benefit programs. In addition, they are appropriate for those employers who desire to provide excellent benefits to their employees, but prefer slower vesting and benefit accrual rules than those provided under qualified retirement plans.

Although the Zermatt Life/Health Insurance Trust is subject to non-discrimination rules which require that "non-highly compensated" employees benefit under the plan at a rate comparable to the rate at which "highly compensated" employees benefit. However, such requirements are much easier to satisfy than similar requirements imposed under qualified retirement plans.

Because of administrative costs associated with this type of program, it is generally a good idea for employers with 10 or more employees who desire to make substantial contributions to the plan ($40,000 or more annually)