- 58 -
would have been deductible had it provided the benefits directly
to its employees. Subpart D's limitations are inapplicable when
section 419A(f)(6) applies. Section 419A(f)(6) generally lets an
employer fully deduct its contributions in the year made,
although its employees may not have to report these contributions
as income until a later year.
We agree with petitioners that the Prime Plan was a welfare
benefit fund. See sec. 419(e)(1), (2)(B), (3)(B); sec. 1.162-10,
Income Tax Regs; see also Schneider v. Commissioner, T.C. Memo.
1992-24; Moser v. Commissioner, T.C. Memo. 1989-142, affd. on
other grounds 914 F.2d 1040 (8th Cir. 1990). Mr. Weiss testified
credibly that he designed the Prime Plan intending entirely to
provide employees with "real" welfare benefits that would not be
subject to abuse, and we read the record to support his
testimony. The DWB's under the Trust Agreement also are not
payable upon the happening of a certainty, but more closely
resemble insurance payable only in the case of an uncertainty.
See Harry A. Wellons, Jr., M.D., S.C. v. Commissioner, 31 F.3d
569 (7th Cir. 1994), affg. T.C. Memo. 1992-704. Although the
Prime Plan had features of deferred compensation (e.g., the
payment of DWB's upon an employee's termination from employment
based on his or her compensation and length of service, the
presence of vesting schedules), these features were swallowed up
by the Prime Plan's valid welfare benefit purpose so as to make
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