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fits).
We find the Trustee’s interpretation of section
512(a)(3)(E)(i) (viz., the parenthetical phrase “(not taking into
account any reserve described in section 419A(c)(2)(A) for post-
retirement medical benefits)” modifies both “an amount of assets
set aside” and “the account limit determined under section 419A”
referred to in section 512(a)(3)(E)(i)) to be a strained and
unreasonable interpretation. We reject that interpretation. We
conclude that the parenthetical phrase appearing at the end of
section 512(a)(3)(E)(i), as reasonably and properly construed,
modifies only “the account limit determined under section 419(A)”
referred to in section 512(a)(3)(E)(i). Our construction is
supported by the temporary regulations under section
512(a)(3)(E)(i).
Section 1.512(a)-5T, Q&A-3(a), Temporary Income Tax Regs.,
51 Fed. Reg. 4332 (Feb. 4, 1986), as amended by 51 Fed. Reg.
11303 (Apr. 2, 1986) (Q&A-3(a)), provides in pertinent part:
Q-3: What amount of income may a VEBA, SUB or
GLSO set aside for exempt purposes?
A-3: (a) Pursuant to section 512(a)(3)(E)(i), the
amounts set aside in a VEBA, SUB, or GLSO (including a
VEBA, SUB, or GLSO that is part of a 10 or more em-
ployer plan, as defined in section 419A(f)(6)(B)) as of
the close of a taxable year of such VEBA, SUB, or GLSO
to provide for the payment of life, sick, accident, or
other benefits may not be taken into account for pur-
poses of determining “exempt function income” to the
extent that such amounts exceed the qualified asset
account limit, determined under sections 419A(c) and
419A(f)(7), for such taxable year of the VEBA, SUB, or
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