Title 26 — Internal Revenue Code
Part I · Chapter 1 — Normal Taxes and Surtaxes
§ 419A. Qualified asset account; limitation on additions to account
Statutory text
General rule
For purposes of this subpart and section 512, the term “qualified asset account” means any account consisting of assets set aside to provide for the payment of—
disability benefits,
medical benefits,
SUB or severance pay benefits, or
life insurance benefits.
Limitation on additions to account
No addition to any qualified asset account may be taken into account under section 419(c)(1)(B) to the extent such addition results in the amount in such account exceeding the account limit.
Account limit
For purposes of this section—
In general
Except as otherwise provided in this subsection, the account limit for any qualified asset account for any taxable year is the amount reasonably and actuarially necessary to fund—
claims incurred but unpaid (as of the close of such taxable year) for benefits referred to in subsection (a), and
administrative costs with respect to such claims.
Additional reserve for post-retirement medical and life insurance benefits
The account limit for any taxable year may include 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 to be provided to covered employees (determined on the basis of current medical costs), or
post-retirement life insurance benefits to be provided to covered employees.
Amount taken into account for SUB or severance pay benefits
In general
The account limit for any taxable year with respect to SUB or severance pay benefits is 75 percent of the average annual qualified direct costs for SUB or severance pay benefits for any 2 of the immediately preceding 7 taxable years (as selected by the fund).
Special rule for certain new plans
In the case of any new plan for which SUB or severance pay benefits are not available to any key employee, the Secretary shall, by regulations, provide for an interim amount to be taken into account under paragraph (1).
Limitation on amounts to be taken into account
Disability benefits
For purposes of paragraph (1), disability benefits payable to any individual shall not be taken into account to the extent such benefits are payable at an annual rate in excess of the lower of—
75 percent of such individual’s average compensation for his high 3 years (within the meaning of section 415(b)(3)), or
the limitation in effect under section 415(b)(1)(A).
Limitation on SUB or severance pay benefits
For purposes of paragraph (3), any SUB or severance pay benefit payable to any individual shall not be taken into account to the extent such benefit is payable at an annual rate in excess of 150 percent of the limitation in effect under section 415(c)(1)(A).
Special limitation where no actuarial certification
In general
Unless there is an actuarial certification of the account limit determined under this subsection for any taxable year, the account limit for such taxable year shall not exceed the sum of the safe harbor limits for such taxable year.
Safe harbor limits
Short-term disability benefits
In the case of short-term disability benefits, the safe harbor limit for any taxable year is 17.5 percent of the qualified direct costs (other than insurance premiums) for the immediately preceding taxable year with respect to such benefits.
Medical benefits
In the case of medical benefits, the safe harbor limit for any taxable year is 35 percent of the qualified direct costs (other than insurance premiums) for the immediately preceding taxable year with respect to medical benefits.
SUB or severance pay benefits
In the case of SUB or severance pay benefits, the safe harbor limit for any taxable year is the amount determined under paragraph (3).
Long-term disability or life insurance benefits
In the case of any long-term disability benefit or life insurance benefit, the safe harbor limit for any taxable year shall be the amount prescribed by regulations.
Additional reserve for medical benefits of bona fide association plans
In general
An applicable account limit for any taxable year may include a reserve in an amount not to exceed 35 percent of the sum of—
the qualified direct costs, and
the change in claims incurred but unpaid,
for such taxable year with respect to medical benefits (other than post-retirement medical benefits).
Applicable account limit
For purposes of this subsection, the term “applicable account limit” means an account limit for a qualified asset account with respect to medical benefits provided through a plan maintained by a bona fide association (as defined in section 2791(d)(3) of the Public Health Service Act (42 U.S.C. 300gg–91(d)(3))).
Requirement of separate accounts for post-retirement medical or life insurance benefits provided to key employees
In general
In the case of any employee who is a key employee—
a separate account shall be established for any medical benefits or life insurance benefits provided with respect to such employee after retirement, and
medical benefits and life insurance benefits provided with respect to such employee after retirement may only be paid from such separate account.
The requirements of this paragraph shall apply to the first taxable year for which a reserve is taken into account under subsection (c)(2) and to all subsequent taxable years.
Coordination with section 415
For purposes of section 415, any amount attributable to medical benefits allocated to an account established under paragraph (1) shall be treated as an annual addition to a defined contribution plan for purposes of section 415(c). Subparagraph (B) of section 415(c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.
Key employee
For purposes of this section, the term “key employee” means any employee who, at any time during the plan year or any preceding plan year, is or was a key employee as defined in section 416(i).
Special limitations on reserves for medical benefits or life insurance benefits provided to retired employees
Reserve must be nondiscriminatory
No reserve may be taken into account under subsection (c)(2) for post-retirement medical benefits or life insurance benefits to be provided to covered employees unless the plan meets the requirements of section 505(b) with respect to such benefits (whether or not such requirements apply to such plan). The preceding sentence shall not apply to any plan maintained pursuant to an agreement between employee representatives and 1 or more employers if the Secretary finds that such agreement is a collective bargaining agreement and that post-retirement medical benefits or life insurance benefits were the subject of good faith bargaining between such employee representatives and such employer or employers.
Limitation on amount of life insurance benefits
Life insurance benefits shall not be taken into account under subsection (c)(2) to the extent the aggregate amount of such benefits to be provided with respect to the employee exceeds $50,000.
Definitions and other special rules
For purposes of this section—
SUB or severance pay benefit
The term “SUB or severance pay benefit” means—
any supplemental unemployment compensation benefit (as defined in section 501(c)(17)(D)), and
any severance pay benefit.
Medical benefit
The term “medical benefit” means a benefit which consists of the providing (directly or through insurance) of medical care (as defined in section 213(d)).
Life insurance benefit
The term “life insurance benefit” includes any other death benefit.
Valuation
For purposes of this section, the amount of the qualified asset account shall be the value of the assets in such account (as determined under regulations).
Special rule for collective bargained and employee pay-all plans
No account limits shall apply in the case of any qualified asset account under a separate welfare benefit fund—
under a collective bargaining agreement, or
an employee pay-all plan under section 501(c)(9) if—
such plan has at least 50 employees (determined without regard to subsection (h)(1)), and
no employee is entitled to a refund with respect to amounts in the fund, other than a refund based on the experience of the entire fund.
Exception for 10-or-more employer plans
In general
This subpart shall not apply in the case of any welfare benefit fund which is part of a 10 or more employer plan. The preceding sentence shall not apply to any plan which maintains experience-rating arrangements with respect to individual employers.
10 or more employer plan
For purposes of subparagraph (A), the term “10 or more employer plan” means a plan—
to which more than 1 employer contributes, and
to which no employer normally contributes more than 10 percent of the total contributions contributed under the plan by all employers.
Adjustments for existing excess reserves
Increase in account limit
The account limit for any of the first 4 taxable years to which this section applies shall be increased by the applicable percentage of any existing excess reserves.
Applicable percentage
For purposes of subparagraph (A)—
| In the case of: | The applicable percentage is: |
|---|---|
| The first taxable year to which this section applies | 80 |
| The second taxable year to which this section applies | 60 |
| The third taxable year to which this section applies | 40 |
| The fourth taxable year to which this section applies | 20. |
Existing excess reserve
For purposes of computing the increase under subparagraph (A) for any taxable year, the term “existing excess reserve” means the excess (if any) of—
the amount of assets set aside at the close of the first taxable year ending after , for purposes described in subsection (a), over
the account limit determined under this section (without regard to this paragraph) for the taxable year for which such increase is being computed.
Funds to which paragraph applies
This paragraph shall apply only to a welfare benefit fund which, as of , had assets set aside for purposes described in subsection (a).
Employer taxed on income of welfare benefit fund in certain cases
In general
In the case of any welfare benefit fund which is not an organization described in paragraph (7), (9), or (17) of section 501(c), the employer shall include in gross income for any taxable year an amount equal to such fund’s deemed unrelated income for the fund’s taxable year ending within the employer’s taxable year.
Deemed unrelated income
For purposes of paragraph (1), the deemed unrelated income of any welfare benefit fund shall be the amount which would have been its unrelated business taxable income under section 512(a)(3) if such fund were an organization described in paragraph (7), (9), or (17) of section 501(c).
Coordination with section 419
If any amount is included in the gross income of an employer for any taxable year under paragraph (1) with respect to any welfare benefit fund—
the amount of the tax imposed by this chapter which is attributable to the amount so included shall be treated as a contribution paid to such welfare benefit fund on the last day of such taxable year, and
the tax so attributable shall be treated as imposed on the fund for purposes of section 419(c)(4)(A).
Aggregation rules
For purposes of this subpart—
Aggregation of funds
Mandatory aggregation
For purposes of subsections (c)(4), (d)(2), and (e)(2), all welfare benefit funds of an employer shall be treated as 1 fund.
Permissive aggregation for purposes not specified in subparagraph (A)
For purposes of this section (other than the provisions specified in subparagraph (A)), at the election of the employer, 2 or more welfare benefit funds of such employer may (to the extent not inconsistent with the purposes of this subpart and section 512) be treated as 1 fund.
Treatment of related employers
Rules similar to the rules of subsections (b), (c), (m), and (n) of section 414 shall apply.
Regulations
The Secretary shall prescribe such regulations as may be 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.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Tax Reform Act of 1984
Pub. L. 98–369 div. A title V § 511(a) · 98 Stat. 494
Enacted · 26 U.S.C. § 419A
Added Pub. L. 98–369, div. A, title V, § 511(a), July 18, 1984, 98 Stat. 856
Source evidence
Code source credit
Added Pub. L. 98–369, div. A, title V, § 511(a), July 18, 1984, 98 Stat. 856Enacted provision · exact public law section
(a) General Rule.— Part I of subchapter D of chapter 1 (relating to pension, profit sharing, stock bonus plans, etc.) is amended by adding at the end thereof the following new subpart: “Subpart D— Treatment of Welfare Benefit Funds “Sec. 419. Treatment of funded welfare benefit plans. “Sec. 419A. Qualified asset account; limitation on additions to account. “SEC. 419. TREATMENT OF FUNDED WELFARE BENEFIT PLANS. “(a) General Rule.— Contributions paid or accrued by an employer to a welfare benefit fund— “(1) shall not be deductible under section 162 or 212, but “(2) if they satisfy the requirements of either of such sections, shall (subject to the limitation of subsection (b)) be deductible under this section for the taxable year in which paid. “(b) Limitation.— The amount of the deduction allowable under subsection (a)(2) for any taxable year shall not exceed the welfare benefit fund’s qualified cost for the taxable year. “(c) Qualified Cost.— For purposes of this section— “(1) In general.— Except as otherwise provided in this subsection, Post, p. 856. the term ‘qualified cost’ means, with respect to any taxable year, the sum of— “(A) the qualified direct cost for such taxable year, and “(B) subject to the limitation of section 419A(b), any addition to a qualified asset account for the taxable year. “(2) Reduction for funds after-tax income.— In the case of any welfare benefit fund, the qualified cost for any taxable year shall be reduced by such fund’s after-tax income for such taxable year. “(3) Qualified direct cost.— “(A) In general.— The term ‘qualified direct cost’ means, with respect to any taxable year, the aggregate amount (including administrative expenses) which would have been allowable as a deduction to the employer with respect to the benefits provided during the taxable year, if— “(i) such benefits were provided directly by the employer, and “(ii) the employer used the cash receipts and disbursements method of accounting. “(B) Time when benefits provided — For purposes of subparagraph (A), a benefit shall be treated as provided when such benefit would be includible in the gross income of the employee if provided directly by the employer (or would be so includible but for any provision of this chapter excluding such benefit from gross income). “(C) 60-month amortization of child care facilities.— “(i) In general.— In determining qualified direct costs with respect to any child care facility for purposes of subparagraph (A), in lieu of depreciation the adjusted basis of such facility shall be allowable as a deduction ratably over a period of 60 months beginning with the month in which the facility is placed in service. “(ii) Child care facility.— The term ‘child care facility’ means any tangible property which qualifies under regulations prescribed by the Secretary as a child care center primarily for children of employees of the employer; except that such term shall not include any property— “(I) not of a character subject to depreciation; or “(II) located outside the United States. “(4) After-tax income.— “(A) In general.— The term ‘after-tax income’ means, with respect to any taxable year, the gross income of the welfare benefit fund reduced by the sum of— “(i) the deductions allowed by this chapter which are directly connected with the production of such gross income, and “(ii) the tax imposed by this chapter on the fund for the taxable year. “(B) Treatment of certain amounts.— In determining the gross income of any welfare benefit fund— “(i) contributions and other amounts received from employees shall be taken into account, but “(ii) contributions from the employer shall not be taken into account. “(5) Item only taken into account once.— No item may be taken into account more than once in determining the qualified cost of any welfare benefit fund. “(d) Carryover of Excess Contributions.— If— “(1) the amount of the contributions paid (or deemed paid under this subsection) by the employer during any taxable year to a welfare benefit fund, exceeds “(2) the limitation of subsection (b), such excess shall be treated as an amount paid by the employer to such fund during the succeeding taxable year. “(e) Welfare Benefit Fund.— For purposes of this section— “(1) In general.— The term ‘welfare benefit fund’ means any fund— “(A) which is part of a plan of an employer, and “(B) through which the employer provides welfare benefits to employees or their beneficiaries. “(2) Welfare benefit.— The term ‘welfare benefit’ means any benefit other than a benefit with respect to which— “(A) section 83(h) applies, “(B) section 404 applies (determined without regard to section 404(b)(2)), “(C) section 404A applies, or “(D) an election under section 463 applies. “(3) Fund.— The term ‘fund’ means— “(A) any organization described in paragraph (7), (9), (17), or (20) of section 501(c), “(B) any trust, corporation, or other organization not exempt from the tax imposed by this chapter, and “(C) to the extent provided in regulations, any account held for an employer by any person. “(f) Method of Contributions, Etc., Having the Effect of a Plan.— If— “(1) there is no plan, but “(2) there is a method or arrangement of employer contributions or benefits which has the effect of a plan, this section shall apply as if there were a plan. “(g) Extension to Plans for Independent Contractors.— If any fund would be a welfare benefit fund (as modified by subsection (f)) but for the fact that there is no employee-employer relationship— “(1) this section shall apply as if there were such a plan, and “(2) any reference in this section to the employer shall be treated as a reference to the person for whom services are provided, and any reference in this section to an employee shall be treated as a reference to the person providing the services. “SEC. 419A. QUALIFIED ASSET ACCOUNT; LIMITATION ON ADDITIONS TO ACCOUNT. “(a) General Rule.— For purposes of this subpart, the term ‘qualified asset account’ means any account consisting of assets set aside to provide for the payment of— “(1) disability benefits, “(2) medical benefits, “(3) SUB or severance pay benefits, or “(4) life insurance benefits. “(b) Limitation on Additions to Account.— No addition to any qualified asset account may be taken into account under section 419(c)(1)(B) to the extent such addition results in the amount in such Ante, p. 854. account exceeding the account limit. “(c) Account Limit.— For purposes of this section— “(1) In general.— Except as otherwise provided in this subsection, the account limit for any qualified asset account for any taxable year is the amount reasonably and actuarially necessary to fund— “(A) claims incurred but unpaid (as of the close of such taxable year) for benefits referred to in subsection (a), and “(B) administrative costs with respect to such claims. “(2) Additional reserve for post-retirement medical and life insurance benefits.— The account limit for any taxable year may include 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— “(A) post-retirement medical benefits to be provided to covered employees (determined on the basis of current medical costs), or “(B) post-retirement life insurance benefits to be provided to covered employees. “(3) Amount taken into account for sub or severence pay benefits.— “(A) In general.— The account limit for any taxable year with respect to SUB or severance pay benefits is 75 percent of the average annual qualified direct costs for SUB or severance pay benefits for any 2 of the immediately preceding 7 taxable years (as selected by the fund). “(B) Special rule for certain new plans.— In the case of any new plan for which SUB or severance pay benefits are not available to any key employee, the Secretary shall, by regulations, provide for an interim amount to be taken into account under paragraph (1). “(4) Limitation on amounts to be taken into account.— “(A) Disability benefits.— For purposes of paragraph (1), disability benefits payable to any individual shall not be taken into account to the extent such benefits are payable at an annual rate in excess of the lower of— “(i) 75 percent of such individual’s average compensation for his high 3 years (within the meaning of section 415(b)(3)), or “(ii) the limitation in effect under section 415(b)(1)(A). “(B) Limitation on sub or severance pay benefits.— For purposes of paragraph (3), any SUB or severance pay benefit payable to any individual shall not be taken into account to the extent such benefit is payable at an annual rate in excess of 150 percent of the limitation in effect under section 415(c)(1)(A). “(5) Special limitation where no actuarial certification.— “(A) In general.— Unless there is an actuarial certification of the account limit determined under paragraph (1) for any taxable year, the account limit for such taxable year shall not exceed the sum of the safe harbor limits for such taxable year. “(B) Safe harbor limits.— “(i) Short-term disability benefits.— In the case of short-term disability benefits, the safe harbor limit for any taxable year is 17.5 percent of the qualified direct costs (other than insurance premiums) for the immediately preceding taxable year with respect to such benefits. “(ii) Medical benefits.— In the case of medical benefits, the safe harbor limit for any taxable year is 35 percent of the qualified direct costs (other than insurance premiums) for the immediately preceding taxable year with respect to medical benefits. “(iii) Sub or severance pay benefits.— In the case of SUB or severance pay benefits, the safe harbor limit for any taxable year is the amount determined under paragraph (3). “(iv) Long-term disability or life insurance benefits.— In the case of any long-term disability benefit or life insurance benefit, the safe harbor limit for any taxable year shall be the amount prescribed by regulations. “(d) Requirement of Separate Accounts for Post Retirement Medical or Life Insurance Benefits Provided to Key Employees.— “(1) In general.— In the case of any employee who is a key employee— “(A) a separate account shall be established for any medical benefits or life insurance benefits provided with respect to such employee after retirement, and “(B) medical benefits and life insurance benefits provided with respect to such employee after retirement may only be paid from such separate account. “(2) Coordination with section 415.— For purposes of section 415, any amount attributable to medical benefits allocated to an account established under paragraph (1) shall be treated as an annual addition to a defined contribution plan for purposes of section 415(c). “(3) Key employee.— For purposes of this section, the term ‘key employee’ means any employee who, at any time during the plan year or any preceding plan year, is or was a key employee as defined in section 416(i). “(e) Special Limitations on Reserves for Medical Benefits or Life Insurance Benefits Provided to Retired Employees.— “(1) Benefits must be nondiscriminatory.— No reserve may be taken into account under subsection (c)(2) for post-retirement medical benefits or life insurance benefits to be provided to covered employees unless the plan meets the requirements of section 505(b)(1) with respect to such benefits. “(2) Taxable life insurance benefits not taken into account.— No life insurance benefit may be taken into account under subsection (c)(2) to the extent— “(A) such benefit is includible in gross income under section 79, or “(B) such benefit would be includible in gross income under section 101(b) (determined by substituting ‘$50,000’ for ‘$5,000’). “(f) Definitions and Other Special Rules.— For purposes of this section— “(1) SUB or severance pay benefit.— The term ‘SUB or severance pay benefit’ means— “(A) any supplemental unemployment compensation benefit (as defined in section 501(c)(17)(D)), and “(B) any severance pay benefit. “(2) Medical benefit.— The term ‘medical benefit’ means a benefit which consists of the providing (directly or through insurance) of medical care (as defined in section 213(d)). “(3) Life insurance benefit.— The term ‘life insurance benefit’ includes any other death benefit. “(4) Valuation.— For purposes of this section, the amount of the qualified asset account shall be the value of the assets in such account (as determined under regulations). “(5) Higher limit in case of collectively bargained plans.— Not later than July 1, 1985, the Secretary shall by regulations provide for special account limits in the case of any qualified asset account under a welfare benefit fund established under a collective bargaining agreement. “(6) Exception for 10-or-more employer plans.— “(A) In general.— This subpart shall not apply in the case of any welfare benefit fund which is part of a 10 or more employer plan. The preceding sentence shall not apply to any plan which maintains experience-rating arrangements with respect to individual employers. “(B) 10 or more employer plan.— For purposes of subparagraph (A), the term to or more employer plan’ means a plan— “(i) to which more than 1 employer contributes, and “(ii) to which no employer normally contributes more than 10 percent of the total contributions contributed under the plan by all employers. “(7) Adjustments for existing excess reserves.— “(A) Increase in account limit.— The account limit for any of the first 4 taxable years to which this section applies shall be increased by the applicable percentage of any existing excess reserves. “(B) Applicable percentage.— For purposes of subparagraph (A)— “In the case of: The applicable percentage is: The first taxable year to which this section applies 80 The second taxable year to which this section applies 60 The third taxable year to which this section applies 40 The fourth taxable year to which this section applies 20. “(C) Existing excess reserve.— For purposes of this paragraph, the term ‘existing excess reserve’ means the excess (if any) of— “(i) the amount of assets set aside for purposes described in subsection (a) as of the close of the first taxable year ending after the date of the enactment of the Tax Reform Act of 1984, over Ante, p. 494. “(ii) the account limit which would have applied under this section to such taxable year if this section had applied to such taxable year. “(g) Employer Taxed on Income of Welfare Benefit Fund in Certain Cases.— “(1) In general.— In the case of any welfare benefit fund which is not an organization described in paragraph (7), (9), (17), or (20) of section 501(c), the employer shall include in gross income for any taxable year an amount equal to such fund’s deemed unrelated income for the fund’s taxable year ending within the employer’s taxable year. “(2) Deemed unrelated income.— For purposes of paragraph (1), the deemed unrelated income of any welfare benefit fund shall be the amount which would have been its unrelated business taxable income under section 512(a)(3) if such fund were an organization described in paragraph (7), (9), (17), or (20) of section 501(c). “(h) Aggregation Rules.— For purposes of this subpart— “(1) Aggregation of funds.— At the election of the employer, 2 or more welfare benefit funds of such employer may be treated as 1 fund. “(2) Treatment of related employers.— Rules similar to the rules of subsections (b), (c), (m), and (n) of section 414 shall apply. “(i) Regulations.— The Secretary shall prescribe such regulations as may be 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.”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(6)(B) · 100 Stat. 2085
Amended · 26 U.S.C. § 419A(a)
Pub. L. 99–514, § 1851(a)(6)(B), as amended by Pub. L. 100–647, § 1018(u)(12)
Inserted · 26 U.S.C. § 419A(a)
Pub. L. 99–514, § 1851(a)(6)(B), as inserted “and section 512” after “this subpart”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 99–514, § 1851(a)(6)(B), as amended by Pub. L. 100–647, § 1018(u)(12), inserted “and section 512” after “this subpart”.Enacted provision · exact public law section
(B) Subsection (b) of section 419A is amended by striking out “this subpart” and inserting in lieu thereof “this sub-part and section 512”.Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(5) · 100 Stat. 2085
Substituted · 26 U.S.C. § 419A(c)(5)(A)
Pub. L. 99–514, § 1851(a)(5), substituted “under this subsection” for “under paragraph (1)”
Source evidence
Code amendment note
Subsec. (c)(5)(A). Pub. L. 99–514, § 1851(a)(5), substituted “under this subsection” for “under paragraph (1)”.Enacted provision · exact public law section
(5) Clarification of actuarial certification requirement.— Subparagraph (A) of section 419A(c)(5) (relating to special limitation where no actuarial certification) is amended by striking out “under paragraph (1)” and inserting in lieu thereof “under this subsection”.Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(2)(B) · 100 Stat. 2085
Inserted · 26 U.S.C. § 419A(d)(1)
Pub. L. 99–514, § 1851(a)(2)(B), inserted “The requirements of this paragraph shall apply to the first taxable year for which a reserve is taken into account under subsection (c)(2) and to all subsequent taxable years.”
Source evidence
Code amendment note
Subsec. (d)(1). Pub. L. 99–514, § 1851(a)(2)(B), inserted “The requirements of this paragraph shall apply to the first taxable year for which a reserve is taken into account under subsection (c)(2) and to all subsequent taxable years.”Enacted provision · exact public law section
(B) Separate account requirements apply only where there is prefunding.— Paragraph (1) of section 419A(d) is amended by adding at the end thereof the following new sentence: “The requirements of this paragraph shall apply to the first taxable year for which a reserve is taken into account under subsection (c)(2) and to all subsequent taxable years.”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(2)(A) · 100 Stat. 2085
Inserted · 26 U.S.C. § 419A(d)(2)
Pub. L. 99–514, § 1851(a)(2)(A), inserted “Subparagraph (B) of section 415(c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.”
Source evidence
Code amendment note
Subsec. (d)(2). Pub. L. 99–514, § 1851(a)(2)(A), inserted “Subparagraph (B) of section 415(c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.”Enacted provision · exact public law section
(A) Coordination with section 415.— Paragraph (2) of section 419A(d) (relating to coordination with section 415) is amended by adding at the end thereof the following new sentence: “Subparagraph (B) of section 415(c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(3)(A) · 100 Stat. 2085
Amended · 26 U.S.C. § 419A(e)
Pub. L. 99–514, § 1851(a)(3)(A), amended subsec. (e) generally. Prior to amendment, par. (1), benefits must be nondiscriminatory, read as follows: “No reserve may be taken into account under subsection (c)(2) for post-retirement medical benefits or life insurance benefits to be provided to covered employees unless the plan meets the requirements of section 505(b)(1) with respect to such benefits.”, and par. (2), taxable life insurance benefits not taken into account, read as follows: “No life insurance benefit may be taken into account under subsection (c)(2) to the extent—
Source evidence
Code amendment note
Subsec. (e). Pub. L. 99–514, § 1851(a)(3)(A), amended subsec. (e) generally. Prior to amendment, par. (1), benefits must be nondiscriminatory, read as follows: “No reserve may be taken into account under subsection (c)(2) for post-retirement medical benefits or life insurance benefits to be provided to covered employees unless the plan meets the requirements of section 505(b)(1) with respect to such benefits.”, and par. (2), taxable life insurance benefits not taken into account, read as follows: “No life insurance benefit may be taken into account under subsection (c)(2) to the extent—“(A) such benefit is includible in gross income under section 79, or “(B) such benefit would be includible in gross income under section 101(b) (determined by substituting ‘$50,000’ for ‘$5,000’).”
Enacted provision · exact public law section
(A) Subsection (e) of section 419A is amended to read as follows: “(e) Special Limitations on Reserves for Medical Benefits or Life Insurance Benefits Provided to Retired Employees.— “(1) Reserve must be non discriminatory.— No reserve may be taken into account under subsection (c)(2) for post-retirement medical benefits or life insurance benefits to be provided to covered employees unless the plan meets the requirements of section 505(b) with respect to such benefits (whether or not such requirements apply to such plan). The preceding sentence shall not apply to any plan maintained pursuant to an agreement between employee representatives and 1 or more employers if the Secretary finds that such agreement is a collective bargain-ing agreement and that post-retirement medical benefits or life insurance benefits were the subject of good faith bargaining between such employee representatives and such employer or employers. “(2) Limitation on amount of life insurance benefits.— Life insurance benefits shall not be taken into account under subsection (c)(2) to the extent the aggregate amount of such benefits to be provided with respect to the employee exceeds $50,000.”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(13) · 100 Stat. 2085
Amended · 26 U.S.C. § 419A(f)(5)
Pub. L. 99–514, § 1851(a)(13), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “Higher limit in case of collectively bargained plans.—Not later than July 1, 1985, the Secretary shall by regulations provide for special account limits in the case of any qualified asset account under a welfare benefit fund established under a collective bargaining agreement.”
Source evidence
Code amendment note
Subsec. (f)(5). Pub. L. 99–514, § 1851(a)(13), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “Higher limit in case of collectively bargained plans.—Not later than July 1, 1985, the Secretary shall by regulations provide for special account limits in the case of any qualified asset account under a welfare benefit fund established under a collective bargaining agreement.”Enacted provision · exact public law section
(13) Section 419A(f)(5) is amended to read as follows: “(5) Special rule for collective bargained and employee pay-all plans.— No accounts limits shall apply in the case of any qualified asset account under a separate welfare benefit fund— “(A) under a collective bargaining agreement, or “(B) an employee pay-all plan under section 501(c)(9) if— “(i) such plan has at least 50 employees (determined without regard to subsection (h)(1), and “(ii) no employee is entitled to a refund with respect to amounts in the fund, other than a refund based on the experience of the entire fund.”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(4) · 100 Stat. 2085
Repealed · 26 U.S.C. § 419A(f)(5)
Pub. L. 99–514, § 1851(a)(4), which directed amendment of par. (5) by substituting “welfare benefit fund maintained pursuant to” for “welfare benefit fund established under”, was repealed by Pub. L. 100–647, § 1018(t)(2)(A)
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 99–514, § 1851(a)(4), which directed amendment of par. (5) by substituting “welfare benefit fund maintained pursuant to” for “welfare benefit fund established under”, was repealed by Pub. L. 100–647, § 1018(t)(2)(A).Enacted provision · exact public law section
(4) Treatment of collectively bargained plans.— Paragraph (5) of section 419A(f) (relating to higher limit in case of collectively bargained plans) is amended by striking out “welfare benefit fund established under” and inserting in lieu thereof “welfare benefit fund maintained pursuant to”.Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(7) · 100 Stat. 2085
Added · 26 U.S.C. § 419A(f)(7)(C); 26 U.S.C. § 419A(f)(7)(D)
Pub. L. 99–514, § 1851(a)(7), added subpars. (C) and (D)
Struck · 26 U.S.C. § 419A(f)(7)(C); 26 U.S.C. § 419A(f)(7)(D)
Pub. L. 99–514, § 1851(a)(7), struck out former subpar. (C) which read as follows: “For purposes of this paragraph, the term ‘existing excess reserve’ means the excess (if any) of—
Source evidence
Code amendment note
Subsec. (f)(7)(C), (D). Pub. L. 99–514, § 1851(a)(7), added subpars. (C) and (D) and struck out former subpar. (C) which read as follows: “For purposes of this paragraph, the term ‘existing excess reserve’ means the excess (if any) of—“(i) the amount of assets set aside for purposes described in subsection (a) as of the close of the first taxable year ending after the date of the enactment of the Tax Reform Act of 1984, over “(ii) the account limit which would have applied under this section to such taxable year if this section had applied to such taxable year.”
Enacted provision · exact public law section
(7) Clarification of adjustments for existing reserves.— Paragraph (7) of section 419A(f) (relating to adjustments for existing excess reserves) is amended by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraphs: “(C) Existing excess reserve.— For purposes of computing the increase under subparagraph (A) for any taxable year, the term ‘existing excess reserve’ means the excess (if any) of— “(i) the amount of assets set aside at the close of the first taxable year ending after July 18, 1984, for purposes described in subsection (a), over “(ii) the account limit determined under this section (without regard to this paragraph) for the taxable year for which such increase is being computed. “(D) Funds to which paragraph applies.— This paragraph shall apply only to a welfare benefit fund which, as of July 18, 1984, had assets set aside for purposes described in subsection (a).”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(9) · 100 Stat. 2085
Added · 26 U.S.C. § 419A(g)(3)
Pub. L. 99–514, § 1851(a)(9), added par. (3)
Source evidence
Code amendment note
Subsec. (g)(3). Pub. L. 99–514, § 1851(a)(9), added par. (3).Enacted provision · exact public law section
(9) Clarification of taxes paid by employer on income of certain welfare benefit funds.— Subsection (g) of section 419 A (relating to employer taxed on income of welfare benefit funds in certain cases) is amended by adding at the end thereof the following new paragraph: “(3) Coordination with section 419.— If any amount is included in the gross income of an employer for any taxable year under paragraph (1) with respect to any welfare benefit fund— “(A) the amount of the tax imposed by this chapter which is attributable to the amount so included shall be treated as a contribution paid to such welfare benefit fund on the last day of such taxable year, and “(B) the tax so attributable shall be treated as imposed on the fund for purposes of section 419(c)(4)(A).”Tax Reform Act of 1986
Pub. L. 99–514 § 1851(a)(6)(A) · 100 Stat. 2085
Amended · 26 U.S.C. § 419A(h)(1)
Pub. L. 99–514, § 1851(a)(6)(A), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “At the election of the employer, 2 or more welfare benefit funds of such employer may be treated as 1 fund.”
Source evidence
Code amendment note
Subsec. (h)(1). Pub. L. 99–514, § 1851(a)(6)(A), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “At the election of the employer, 2 or more welfare benefit funds of such employer may be treated as 1 fund.”Enacted provision · exact public law section
(A) Paragraph (1) of section 419A(h) (relating to aggregation rules) is amended to read as follows: “(1) Aggregation of funds.— “(A) Mandatory aggregation.— For purposes of subsections (c)(4), (d)(2), and (e)(2), all welfare benefit funds of an employer shall be treated as 1 fund. “(B) Permissive aggregation for purposes not specified in subparagraph (a).— For purposes of this section (other than the provisions specified in subparagraph (A)), at the election of the employer, 2 or more welfare benefit funds of such employer may (to the extent not inconsistent with the purposes of this subpart and section 512) be treated as 1 fund.”Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1018(u)(12) · 102 Stat. 3342
Changed · 26 U.S.C. § 419A(a)
Pub. L. 100–647, § 1018(u)(12), made technical amendment to directory language of Pub. L. 99–514, § 1851(a)(6)(B). See 1986 Amendment note below
Source evidence
Code amendment note
Subsec. (a). Pub. L. 100–647, § 1018(u)(12), made technical amendment to directory language of Pub. L. 99–514, § 1851(a)(6)(B). See 1986 Amendment note below.Enacted provision · exact public law section
(12) Subparagraph (B) of section 1851(a)(6) of the Reform Act is amended by striking out “Subsection (b)” and inserting in lieu thereof “Subsection (a)”.Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1018(t)(2)(A) · 102 Stat. 3342
Repealed · 26 U.S.C. § 419A(f)(5)
Pub. L. 100–647, § 1018(t)(2)(A), repealed Pub. L. 99–514, § 1851(a)(4). See 1986 Amendment note below
Source evidence
Code amendment note
Subsec. (f)(5). Pub. L. 100–647, § 1018(t)(2)(A), repealed Pub. L. 99–514, § 1851(a)(4). See 1986 Amendment note below.Enacted provision · exact public law section
(A) Section 1851(a) of the Reform Act is amended by 26 USC 419A. striking out paragraph (4) thereof.Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1018(t)(1)(C) · 102 Stat. 3342
Substituted · 26 U.S.C. § 419A(f)(5)
Pub. L. 100–647, § 1018(t)(1)(C), substituted “account” for “accounts”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 100–647, § 1018(t)(1)(C), substituted “account” for “accounts”.Enacted provision · exact public law section
(C) Section 419A(f)(5) of the 1986 Code is amended by striking out “accounts” and inserting in lieu thereof “account”.Small Business Job Protection Act of 1996
Pub. L. 104–188 title I § 1704(t)(60) · 110 Stat. 1755
Substituted · 26 U.S.C. § 419A(c)(3)
Pub. L. 104–188 substituted “severance” for “severence” in heading
Source evidence
Code amendment note
Subsec. (c)(3). Pub. L. 104–188 substituted “severance” for “severence” in heading.Enacted provision · exact public law section
(60) The heading of paragraph (3) of section 419A(c) is amended by striking “severence” and inserting “severance”.Pub. L. 109–280 title VIII § 843(a) · 120 Stat. 780
Added · 26 U.S.C. § 419A(c)(6)
Pub. L. 109–280 added par. (6)
Source evidence
Code amendment note
Subsec. (c)(6). Pub. L. 109–280 added par. (6).Enacted provision · exact public law section
(a) In General.— Section 419A(c) of the Internal Revenue Code of 1986 26 USC 419A. (relating to account limit) is amended by adding at the end the following new paragraph: “(6) Additional reserve for medical benefits of bona fide association plans.— “(A) In general.— An applicable account limit for any taxable year may include a reserve in an amount not to exceed 35 percent of the sum of— “(i) the qualified direct costs, and “(ii) the change in claims incurred but unpaid, for such taxable year with respect to medical benefits (other than post-retirement medical benefits). “(B) Applicable account limit.— For purposes of this subsection, the term ‘applicable account limit’ means an account limit for a qualified asset account with respect to medical benefits provided through a plan maintained by a bona fide association (as defined in section 2791(d)(3) of the Public Health Service Act (42 U.S.C. 300gg–91(d)(3)).” .Effective date note
Pub. L. 109–280, title VIII, § 843(b), Aug. 17, 2006, 120 Stat. 1010, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2006.”Energy and Water Development and Related Agencies Appropriations Act, 2018
Pub. L. 115–141 § 401(a)(96) · 132 Stat. 348
Substituted · 26 U.S.C. § 419A(c)(6)(B)
Pub. L. 115–141, § 401(a)(96), substituted “(42 U.S.C. 300gg–91(d)(3)))” for “(42 U.S.C. 300gg–91(d)(3))”
Source evidence
Code amendment note
Subsec. (c)(6)(B). Pub. L. 115–141, § 401(a)(96), substituted “(42 U.S.C. 300gg–91(d)(3)))” for “(42 U.S.C. 300gg–91(d)(3))”.Enacted provision · exact public law section
Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.Energy and Water Development and Related Agencies Appropriations Act, 2018
Pub. L. 115–141 § 401(b)(21)(B) · 132 Stat. 348
Substituted · 26 U.S.C. § 419A(g)(1); 26 U.S.C. § 419A(g)(2)
Pub. L. 115–141, § 401(b)(21)(B), (C), substituted “or (17)” for “(17), or (20)”
Source evidence
Code amendment note
Subsec. (g)(1), (2). Pub. L. 115–141, § 401(b)(21)(B), (C), substituted “or (17)” for “(17), or (20)”.Enacted provision · exact public law section
Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.
20 of 20 references resolved to an enrolled provision
Editorial Notes
Amendments1986–2018 · 5 rounds
2018
Subsec. (c)(6)(B). Pub. L. 115–141, § 401(a)(96), substituted “(42 U.S.C. 300gg–91(d)(3)))” for “(42 U.S.C. 300gg–91(d)(3))”.
Subsec. (g)(1), (2). Pub. L. 115–141, § 401(b)(21)(B), (C), substituted “or (17)” for “(17), or (20)”.
2006
Subsec. (c)(6). Pub. L. 109–280 added par. (6).
1996
Subsec. (c)(3). Pub. L. 104–188 substituted “severance” for “severence” in heading.
1988
Subsec. (a). Pub. L. 100–647, § 1018(u)(12), made technical amendment to directory language of Pub. L. 99–514, § 1851(a)(6)(B). See 1986 Amendment note below.
Subsec. (f)(5). Pub. L. 100–647, § 1018(t)(2)(A), repealed Pub. L. 99–514, § 1851(a)(4). See 1986 Amendment note below.
Pub. L. 100–647, § 1018(t)(1)(C), substituted “account” for “accounts”.
1986
Subsec. (a). Pub. L. 99–514, § 1851(a)(6)(B), as amended by Pub. L. 100–647, § 1018(u)(12), inserted “and section 512” after “this subpart”.
Subsec. (c)(5)(A). Pub. L. 99–514, § 1851(a)(5), substituted “under this subsection” for “under paragraph (1)”.
Subsec. (d)(1). Pub. L. 99–514, § 1851(a)(2)(B), inserted “The requirements of this paragraph shall apply to the first taxable year for which a reserve is taken into account under subsection (c)(2) and to all subsequent taxable years.”
Subsec. (d)(2). Pub. L. 99–514, § 1851(a)(2)(A), inserted “Subparagraph (B) of section 415(c)(1) shall not apply to any amount treated as an annual addition under the preceding sentence.”
Subsec. (e). Pub. L. 99–514, § 1851(a)(3)(A), amended subsec. (e) generally. Prior to amendment, par. (1), benefits must be nondiscriminatory, read as follows: “No reserve may be taken into account under subsection (c)(2) for post-retirement medical benefits or life insurance benefits to be provided to covered employees unless the plan meets the requirements of section 505(b)(1) with respect to such benefits.”, and par. (2), taxable life insurance benefits not taken into account, read as follows: “No life insurance benefit may be taken into account under subsection (c)(2) to the extent—
“(A) such benefit is includible in gross income under section 79, or
“(B) such benefit would be includible in gross income under section 101(b) (determined by substituting ‘$50,000’ for ‘$5,000’).”
Subsec. (f)(5). Pub. L. 99–514, § 1851(a)(13), amended par. (5) generally. Prior to amendment, par. (5) read as follows: “Higher limit in case of collectively bargained plans.—Not later than , the Secretary shall by regulations provide for special account limits in the case of any qualified asset account under a welfare benefit fund established under a collective bargaining agreement.”
Pub. L. 99–514, § 1851(a)(4), which directed amendment of par. (5) by substituting “welfare benefit fund maintained pursuant to” for “welfare benefit fund established under”, was repealed by Pub. L. 100–647, § 1018(t)(2)(A).
Subsec. (f)(7)(C), (D). Pub. L. 99–514, § 1851(a)(7), added subpars. (C) and (D) and struck out former subpar. (C) which read as follows: “For purposes of this paragraph, the term ‘existing excess reserve’ means the excess (if any) of—
“(i) the amount of assets set aside for purposes described in subsection (a) as of the close of the first taxable year ending after the date of the enactment of the Tax Reform Act of 1984, over
“(ii) the account limit which would have applied under this section to such taxable year if this section had applied to such taxable year.”
Subsec. (g)(3). Pub. L. 99–514, § 1851(a)(9), added par. (3).
Subsec. (h)(1). Pub. L. 99–514, § 1851(a)(6)(A), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “At the election of the employer, 2 or more welfare benefit funds of such employer may be treated as 1 fund.”
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Pub. L. 109–280, title VIII, § 843(b), , 120 Stat. 1010, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after .”
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Savings Provision
For provisions that nothing in amendment by section 401(b)(21)(B), (C) of Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to , for purposes of determining liability for tax for periods ending after , see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.
Application of Section 419A(e) to Group-Term Life Insurance
Pub. L. 99–514, title XVIII, § 1851(a)(3)(B), , 100 Stat. 2859, as amended by Pub. L. 100–647, title I, § 1018(t)(2)(D), , 102 Stat. 3587, provided that: “Subsection (e) of section 419A, section 505, and section 4976(b)(1)(B) of the Internal Revenue Code of 1954 [now 1986] (as amended by subparagraph (A)) shall not apply to any group-term life insurance to the extent that the amendments made by section 223(a) of the Tax Reform Act of 1984 [section 223(a) of Pub. L. 98–369, amending section 79 of this title] do not apply to such insurance by reason of paragraph (2) of section 223(d) of such Act [set out as a note under section 79 of this title].”
Credits
1984–2018 · 6 acts
- 1984Added Pub. L. 98–369, div. A, title V, § 511(a), , 98 Stat. 856
- 1986amended Pub. L. 99–514, title XVIII, § 1851(a)(2), (3)(A), (4)–(7), (9), (13), , 100 Stat. 2858–2860, 2862
- 1988Pub. L. 100–647, title I, § 1018(t)(1)(C), (2)(A), (u)(12), , 102 Stat. 3587, 3590
- 1996Pub. L. 104–188, title I, § 1704(t)(60), , 110 Stat. 1890
- 2006Pub. L. 109–280, title VIII, § 843(a), , 120 Stat. 1010
- 2018Pub. L. 115–141, div. U, title IV, § 401(a)(96), (b)(21)(B), (C), , 132 Stat. 1188, 1202, 1203.
Show as published
(Added Pub. L. 98–369, div. A, title V, § 511(a), , 98 Stat. 856; amended Pub. L. 99–514, title XVIII, § 1851(a)(2), (3)(A), (4)–(7), (9), (13), , 100 Stat. 2858–2860, 2862; Pub. L. 100–647, title I, § 1018(t)(1)(C), (2)(A), (u)(12), , 102 Stat. 3587, 3590; Pub. L. 104–188, title I, § 1704(t)(60), , 110 Stat. 1890; Pub. L. 109–280, title VIII, § 843(a), , 120 Stat. 1010; Pub. L. 115–141, div. U, title IV, § 401(a)(96), (b)(21)(B), (C), , 132 Stat. 1188, 1202, 1203.)