According to the announcement, the Putnam HRA allows union worker’s to accumulate funds during their working years to cover post-retirement medical expenses. Individual accounts are established for union members in which employers make tax deductible contributions. The funds are then invested in mutual funds.
The Putnam HRA allows participants to use a variety of
payment methods after retirement, such as a specially
issued debit card, the announcement said. Gains on account
investments are not taxed when the funds are withdrawn.
HRAs do not have annual limits on the amount contributed for participants, unlike flexible spending accounts (FSAs) and health savings accounts (HSAs).
Putnam said it utilized the 2002 IRS guidance, which clarified the tax status of HRAs under Taft-Hartley arrangements, in establishing its HRA.
“Health care costs have grown by a staggering 69% from 1999 to 2004,” said Howie Kreutzberg, Director of Taft-Hartley Services at Putnam Investments, in the announcement. “Plan trustees and members need options to keep health care affordable. Further, an arrangement, like the Putnam HRA, is particularly important for union workers, who often work in physically demanding industries that have a high rate of early retirement. These workers are particularly vulnerable to the escalating costs of medical care and insurance if they retire before the age of 65 because they are not yet eligible for Medicare.”
For more information, visit www.putnaminvestments.com .