§4976 — Title 26 Internal Revenue Code | U.S. Code

Summary

Makes tax rules apply when an employer keeps a welfare benefit fund and provides a "disqualified benefit" in any taxable year. A "disqualified benefit" is one of three things: post-retirement medical or life insurance for a key employee when law (section 419A(d)) requires a separate account but the payment did not come from that account; post-retirement medical or life insurance that favors some workers unless the plan meets section 505(b) rules; or any part of the fund that goes back to the employer. Exceptions: the 505(b) rule does not apply to benefits bargained in a valid collective bargaining agreement; amounts that were not deductible under section 419 for the year or earlier years are not treated as a reversion and are not included in any carryover under section 419(d); and subparts (A) and (B) do not apply to benefits charged to an existing post-retirement reserve (see section 512(a)(3)(E)). Words here have the same meanings as in subpart D of part I of subchapter D of chapter 1.

Title 26, §4976

Internal Revenue Code — Source: USLM XML via OLRC

(a)If—

(1)an employer maintains a welfare benefit fund, and

(2)there is a disqualified benefit provided during any taxable year,

(b)For purposes of subsection (a)—

(1)The term “disqualified benefit” means—

(A)any post-retirement medical benefit or life insurance benefit provided with respect to a key employee if a separate account is required to be established for such employee under section 419A(d) and such payment is not from such account,

(B)any post-retirement medical benefit or life insurance benefit provided with respect to an individual in whose favor discrimination is prohibited unless the plan meets the requirements of section 505(b) with respect to such benefit (whether or not such requirements apply to such plan), and

(C)any portion of a welfare benefit fund reverting to the benefit of the employer.

(2)Paragraph (1)(B) 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 the benefits referred to in paragraph (1)(B) were the subject of good faith bargaining between such employee representatives and such employer or employers.

(3)Paragraph (1)(C) shall not apply to any amount attributable to a contribution to the fund which is not allowable as a deduction under section 419 for the taxable year or any prior taxable year (and such contribution shall not be included in any carryover under section 419(d)).

(4)Subparagraphs (A) and (B) of paragraph (1) shall not apply to post-retirement benefits charged against an existing reserve for post-retirement medical or life insurance benefits (as defined in section 512(a)(3)(E)) or charged against the income on such reserve.

(c)For purposes of this section, the terms used in this section shall have the same respective meanings as when used in subpart D of part I of subchapter D of chapter 1.

Notes & Related Subsidiaries

Editorial Notes

Codification Pub. L. 101–140 amended this section to read as if the

Amendments

made by section 1011B(a)(27) of Pub. L. 100–647 (enacting subsec. (c)) had not been enacted. Subsequent to enactment by Pub. L. 100–647, subsec. (c) was amended by Pub. L. 100–647, § 3021(a)(1)(C). See 1988 Amendment note below.

Amendments

1989—Subsec. (b)(5). Pub. L. 101–140 amended subsec. (b) to read as if

Amendments

by Pub. L. 100–647, § 1011B(a)(27)(B), had not been enacted, see 1988 Amendment note below. Subsecs. (c), (d). Pub. L. 101–140 amended this section to read as if

Amendments

by Pub. L. 100–647, § 1011B(a)(27)(A), had not been enacted, see 1988 Amendment note below. 1988—Subsec. (b)(5). Pub. L. 100–647, § 1011B(a)(27)(B), added par. (5) relating to limitation in case of benefits to which section 89 applies. Subsec. (c). Pub. L. 100–647, § 1011B(a)(27)(A), added subsec. (c) relating to tax on funded welfare benefit funds which include discriminatory employee benefit plan. Former subsec. (c) redesignated (d). Subsec. (c)(1)(B). Pub. L. 100–647, § 3021(a)(1)(C)(i), substituted “any testing year (as defined in section 89(j)(13))” for “any plan year”, see Codification note above. Subsec. (c)(2)(A). Pub. L. 100–647, § 3021(a)(1)(C)(ii), substituted “testing” for “plan” in cls. (i) and (ii), see Codification note above. Subsec. (d). Pub. L. 100–647, § 1011B(a)(27)(A), redesignated former subsec. (c) as (d). 1986—Subsec. (b). Pub. L. 99–514 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: “For purposes of subsection (a), the term ‘disqualified benefit’ means— “(1) any medical benefit or life insurance benefit provided with respect to a key employee other than from a separate account established for such owner under section 419A(d), and “(2) any post-retirement medical or life insurance benefit unless the plan meets the requirements of section 505(b)(1) with respect to such benefit, and “(3) any portion of such fund reverting to the benefit of the employer.”

Statutory Notes and Related Subsidiaries

Effective Date

of 1989 AmendmentAmendment by Pub. L. 101–140 effective as if included in section 1151 of Pub. L. 99–514, see section 203(c) of Pub. L. 101–140, set out as a note under section 79 of this title.

Effective Date

of 1988 AmendmentAmendment by section 1011B(a)(27)(A), (B) of 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. Amendment by section 3021(a)(1)(C) of Pub. L. 100–647 effective as if included in the

Amendments

by section 1151 of Pub. L. 99–514, see section 3021(d)(1) of Pub. L. 100–647, set out as a note under section 129 of this title.

Effective Date

of 1986 AmendmentAmendment 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.

Effective Date

Section applicable to benefits provided after Dec. 31, 1985, see section 511(e)(7) of Pub. L. 98–369, set out as a note under section 419 of this title. Plan

Amendments

Not Required Until January 1, 1989For 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 Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.

§4976 Taxes with respect to funded welfare benefit plans

Summary

Title 26, §4976

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Statutory Notes and Related Subsidiaries

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