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employers are prohibited from prefunding benefits expected to be
provided in later years (other than additions made to QAA's).
Stated another way, after the enactment of DEFRA, employers are
no longer allowed to accelerate deductions into one taxable year
for employee welfare benefits to be provided in later taxable
years, except as provided in sections 419(c)(1)(B) and 419A.
Section 419A provides, in relevant part:
SEC. 419A. QUALIFIED ASSET ACCOUNT; LIMITATION ON ADDITIONS
TO ACCOUNT.
(a) General Rule.--For purposes of this subpart and
section 512, the term "qualified asset account" means any
account consisting of assets set aside to provide for the
payment of--
(1) disability benefits,
(2) medical benefits,
(3) SUB or severance pay benefits, or
(4) life insurance benefits.
(b) Limitation on Additions to Account.--No addition
to any qualified asset account may be taken into account
under section 419(c)(1)(B) to the extent such addition
results in the amount in such account exceeding the account
limit.
(c) Account Limit.--For purposes of this section--
(1) In general.--Except as otherwise provided in
this subsection, the account limit for any qualified
asset account for any taxable year is the amount
reasonably and actuarially necessary to fund--
(A) claims incurred but unpaid (as of the
close of such taxable year) for benefits referred
to in subsection (a), and
(B) administrative costs with respect to
such claims.
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