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paid employees would receive substantial benefits from
the plan. * * *
Thus, the committee is concerned that substantial
advance funding of welfare benefits will ultimately
lead to an unacceptable tax burden for many taxpayers
who do not participate in these programs. * * *
[H. Rept. 98-432 (Part 2), at 1275-1276 (1984).]
As reflected in the report of the conference, the Congress
enacted subpart D with the understanding that subpart D's
principal purpose was “to prevent employers from taking premature
deductions, for expenses that have not yet been incurred, by
interposing an intermediary organization which holds assets which
are used to provide benefits to the employees of the employer.”
H. Conf. Rept. 98-861, at 1155 (1984); 1984-3 C.B. (Vol. 2) 1,
409. The conference report states that
"While in many cases welfare benefit funds are designed
to function in a manner similar to insurance
arrangements, the conference [was] concerned that there
[were] no clear standards of limitations applicable to
such funds that [prevented] their utilization for
substantial nonqualified deferred compensation funding
outside the general pension plan funding, accrual and
vesting rules." [Id. at 1155.]
The conference report commented as follows on the meaning of the
term "funds":
a retired life reserve or premium stabilization account
ordinarily is to be considered a fund or part of a
fund, since such an account is maintained for an
individual employer and that employer has a
determinable right to have the amount in such an
account applied against that employer's future costs of
benefit claims or insurance premiums. A similar
situation exists with respect to premium arrangements,
under which an employer may, in some cases, pay an
insurance company more in a year than the benefit costs
incurred in that year and the employer has an
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