AAM Phase 1 Practice Exam

What happens to HRA balances when employment ends?

They stay with the employee They are transferred to the new plan They are forfeited They stay with the employer

Correct Answer:

They stay with the employer

Explanation:

HRA funds are owned by the employer and are not portable to the employee. When employment ends, any unused balance generally does not transfer to a new employer or to the employee; it stays with the employer under the plan rules (often being forfeited by the employee and retained by the employer). The exact treatment is defined in the plan document, but the standard rule is that the balance remains with the employer.

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