- 6 -
retired employees. Dorn annualized this number to take into
account the remainder of fiscal 1987 and arrived at expenses of
$2,093,462. Dorn then subtracted employee contributions of
$547,110 and $6,402 related to key employees. (Plans covering
key employees must be funded separately. See sec. 419A(d).) The
result of the above calculations was $1,539,950. At this point,
Dorn consulted with Harry A. Don (Don), an actuary with the Wyatt
Company. During a telephone conversation, Don told Dorn that the
use of a factor of 7 would be appropriate. Dorn multiplied
$1,539,950 by 7 and arrived at $10,779,650, which was used in
calculating the 1987 contribution.
Actual Expenditures
For its 1987, 1988, and 1989 fiscal years, petitioner’s
financial statements reported expenses for retiree health care
and life insurance benefits of $2,575,000, $2,494,000, and
$2,899,000, respectively. The following amounts were paid by
Provident, on behalf of the VEBA Trust, for postretirement
benefits and administrative expenses for retired employees:
Year Ended Amount1
June 30, 1988 $2,607,511
June 30, 1989 23,069,240
June 30, 1990 3,528,896
June 30, 1991 4,275,589
1Because the VEBA Trust reimbursed
Provident for these payments, there is a
slight timing difference resulting from these
disbursements.
2Expenses for July and August 1988
totaled $412,467.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011