- 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 NextLast modified: May 25, 2011