- 15 -
4. Contributions to the Postretirement Medical Trust
In 1991-94, Norwest made contributions to the postretirement
medical trust of $30,689,717, $2,170,000, $13,791,600, and
$12,247,933, respectively. During 1992-94, Norwest’s retired
employees made contributions to the postretirement medical trust of
$473,832.62, $736,176.25, and $784,906.22, respectively. In 1993,
$175,216 was transferred from the master trust to the
postretirement medical trust.
E. Respondent’s Determinations
Respondent determined that Norwest’s method for computing the
1991 contribution for postretirement benefits for retirees was
improper and resulted in a contribution that exceeded the account
limit for a reserve under section 419A(c)(2). As a result of the
1991 overfunding, respondent determined that the reserve was also
overfunded in 1992-94.
OPINION
A. Statutory Framework: Sections 419 and 419A
Sections 419 and 419A limit deductions for contributions made
by a taxpayer to an employee welfare benefit fund.14 In general,
section 419(a)(1) denies a deduction for contributions paid or
accrued by an employer to a welfare benefit fund. However, if the
contributions would otherwise be deductible, then section 419(a)(2)
14 For purposes of secs. 419 and 419A, a welfare benefit
fund includes a VEBA that is exempt from taxation under sec.
501(c)(9).
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011