Square D Company and Subsidiaries - Page 20

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                              appropriate to carry out the purposes of this           
                              subpart.  Such regulations may provide that             
                              the plan administrator of any welfare benefit           
                              fund which is part of a plan to which more              
                              than 1 employer contributes shall submit such           
                              information to the employers contributing to            
                              the fund as may be necessary to enable the              
                              employers to comply with the provisions of              
                              this section.                                           
               A fund's QAA consists of any assets set aside to provide for           
          the payment of (1) disability  benefits, (2) medical benefits,              
          (3) supplemental unemployment compensation benefits (SUB) or                
          severance pay benefits, or (4) life insurance benefits.  Sec.               
          419A(a).  No addition to a QAA which causes the account balance             
          to exceed the account limit may be considered as a portion of the           
          qualified cost under section 419(c)(1)(B).  Sec. 419A(b).  The              
          account limit for any taxable year consists of two separate                 
          elements, each of which is in issue in the instant case.                    
               The first element of the account limit is the amount                   
          reasonably and actuarially necessary to fund CIBU's as of the               
          close of the taxable year, as well as administrative costs                  
          related to such claims.  Sec. 419A(c)(1).  In the event that the            
          CIBU's are not actuarially determined, the deduction can be no              
          greater than certain safe harbor percentages.  Sec. 419A(c)(5).             
          The second element of the account limit is a reserve funded over            
          the working lives of covered employees and actuarially determined           
          on a level basis (using assumptions that are reasonable in the              
          aggregate) as necessary for PRMB's to be provided to covered                
          employees (determined on the basis of current medical costs) or             




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Last modified: May 25, 2011