- 17 - The legislative history of section 419A states the following: Limitations on qualified asset account.--The conference agreement includes substantial modifications to the provisions setting forth the limitation on additions to a qualified asset account. Such an account consists of assets set aside for the payment of disability benefits, medical benefits, supplemental unemployment or severance pay benefits, and life insurance or death benefits. In general, the account limit is the amount estimated to be necessary under actuarial assumptions that are reasonable in the aggregate, to fund the liabilities of the plan for the amount of claims incurred but unpaid, for benefits described in the previous paragraph and administrative costs of such benefits, as of the close of the taxable year. Claims are incurred only when an event entitling the employee to benefits, such as a medical expense, a separation, a disability, or a death actually occurs. The allowable reserve includes amounts for claims estimated to have been incurred but which have not yet been reported, as well as those claims which have been reported but have not yet been paid. * * * [H. Conf. Rept. 98-861, at 1155-1156 (1984), 1984-3 C.B. (Vol. 2) 1, 409-410.] Relevant to our determination herein, the account limit includes: (1) The “amount reasonably and actuarially necessary to fund” certain claims incurred but unpaid and the related administrative costs, sec. 419A(c)(1); and (2) an additional “reserve funded over the working lives of the covered employees and actuarially determined on a level basis (using assumptions that are reasonable in the aggregate) as necessary” for postretirement medical and life insurance benefits, sec. 419A(c)(2). No account limit applies to any qualified asset account for a separate welfare benefit fund maintained pursuant to a collective bargaining agreement. Sec. 419A(f)(5)(A); sec.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011