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Petitioner calculated the amount of the 1987 contribution
based on an actuarial valuation by Wyatt. Wyatt ascertained, as
of November 30, 1987, that the maximum deductible combined
contribution for 1987 for postretirement medical benefits was
$22,476,975. Of that amount, $13,243,405 was attributable to
employees and retirees not covered by collectively bargained
agreements. In its report dated December 9, 1987, Wyatt stated:
The maximum tax deductible contribution for 1987 is
equal to $22,476,975 plus the any [sic] contributions
for postretirement medical paid but not previously
deducted. This subtotal must further be reduced by any
assets attributable to the postretirement medical plan
remaining in the trust at the end of the plan year.
Wyatt offered no explanation as to why the associated
administration expenses were not included.
The lump-sum present values, as of December 1, 1987, of
future retiree medical benefits for current pensioners and for
current active employees not covered by a collectively bargained
agreement, were $10,732,153 and $23,766,492, respectively.
Pursuant to the VEBA Trust agreement, the VEBA Trust's
assets, including the December 29, 1987, contribution, additional
contributions made during 1988, and the trust's investment
earnings, were used to pay the cost of providing welfare benefits
under the Plan to petitioner's employees and retirees as those
benefits (and costs) arose during the VEBA Trust's 1988 year.
The VEBA Trust's balance on November 30, 1988, was $1,525,484.
During the 1988 calendar year, the VEBA Trust paid benefit claims
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