Definition

Section 401(h)

The Internal Revenue Code section authorizing retiree medical benefit accounts within qualified pension plans.

Full definition

Internal Revenue Code §401(h) permits a qualified pension or annuity plan to provide for the payment of sickness, accident, hospitalization, and medical expenses for retired employees, their spouses, and dependents — provided certain structural conditions are met.

Related terms

401(h) Account

A separate sub-account inside a qualified pension or annuity plan used to pay certain retiree medical benefits.

Incidental Benefit Rule

The requirement that 401(h) medical benefits stay subordinate to retirement benefits in the same plan.

Availability, tax treatment, and plan design depend on the facts and circumstances of the employer, plan document, participant group, and applicable law. 401h.com provides general educational information only — not tax, legal, actuarial, investment, or ERISA advice. Consult qualified tax, legal, actuarial, and plan professionals.