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additional reserve funded over the working lives of the covered
employees and actuarially determined on a level basis (using
assumptions that are reasonable in the aggregate) as necessary for
postretirement medical and life insurance benefits. Sec.
419A(c)(1) and (2).
At issue in this case is the computation of the account limit
for the reserve necessary for postretirement medical benefits
provided under section 419A(c)(2). Petitioners and respondent
disagree as to the proper method for computing the account limit
for “a reserve funded over the working lives of the covered
employees and actuarially determined on a level basis (using
assumptions that are reasonable in the aggregate) as necessary for
post-retirement medical benefits”. Additionally, respondent
asserts that the investment rates petitioners used in computing the
reserve were too low.
B. Method for Computing the Account Limit With Respect to a
Reserve
For 1991, Mercer computed Norwest’s contribution to the
postretirement medical trust by including (1) the present value of
postretirement medical benefits for the active employees amortized
over the employees’ remaining working lives, and (2) the entire
present value of the postretirement medical benefits for the
retirees funded in 1 year (the Mercer method). Respondent asserts
that Mercer’s methodology in computing Norwest’s 1991 contribution
for medical benefits to retirees was improper and resulted in a
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