Wells Fargo & Company (f.k.a. Norwest Corporation) and Subsidiaries - Page 49




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            liability may be accumulated no more rapidly than on a level basis                          
            over the working lives of the covered employees, such that the                              
            reserve with respect to an employee can be fully funded no earlier                          
            than upon retirement of the employee.  We conclude that the maximum                         
            amount of the liability that may be satisfied by the reserve is the                         
            amount at the time with respect to which the reserve is computed                            
            that, together with future normal costs and interest, will be                               
            sufficient upon retirement of each employee to pay future medical                           
            claims of the employee when they become due.  See, e.g., United                             
            States v. Atlas Life Ins. Co., 381 U.S. 233, 236 n.3 (1965);                                
            Travelers Ins. Co. v. United States, 303 F.3d 1373, 1380-1381 (Fed.                         
            Cir. 2002); Natl. States Ins. Co. v. Commissioner, 758 F.2d 1277,                           
            1278 (8th Cir. 1985) (a reserve is computed by calculating the                              
            excess of the present value of future benefits payable over the                             
            present value of future net premiums receivable), affg. 81 T.C. 325                         
            (1983).  That amount must be actuarially determined on a level                              
            basis.                                                                                      
                  The actuarial present value of the projected benefit of each                          
            covered employee should be allocated on a level basis to each year                          
            commencing with the year in which the allocation is first                                   
            recognized and ending with the year the employee is expected to                             
            retire.  The funding of “a reserve funded over the working lives of                         
            the covered employees” cannot begin until the reserve is created.                           
            Thus, the allocation is first recognized on the later of the date                           






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