26 U.S.C. § 4976 | Taxes with respect to funded welfare benefit plans

(a)

General rule

If—

(1)

an employer maintains a welfare benefit fund, and

(2)

there is a disqualified benefit provided during any taxable year,

there is hereby imposed on such employer a tax equal to 100 percent of such disqualified benefit.

(b)

Disqualified benefit

For purposes of subsection (a)—

(1)

In general

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)

Exception for collective bargaining plans

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)

Exception for nondeductible contributions

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)

Exception for certain amounts charged against existing reserve

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)

Definitions

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.

Pub. L. 98–369, div. A, title V, § 511(c)(1)July 18, 198498 Stat. 861 Pub. L. 99–514, title XVIII, § 1851(a)(11)Oct. 22, 1986100 Stat. 2861 Pub. L. 100–647, title I, § 1011B(a)(27)(A)Nov. 10, 1988102 Stat. 3487 Pub. L. 101–140, title II, § 203(a)(2)Nov. 8, 1989103 Stat. 830(Added , , ; amended , , ; , (B), title III, § 3021(a)(1)(C), , , 3626; , , .)

Editorial Notes

Codification

Pub. L. 101–140 section 1011B(a)(27) of Pub. L. 100–647 Pub. L. 100–647 Pub. L. 100–647, § 3021(a)(1)(C) amended this section to read as if the amendments made by (enacting subsec. (c)) had not been enacted. Subsequent to enactment by , subsec. (c) was amended by . See 1988 Amendment note below.

Amendments

Pub. L. 101–140 Pub. L. 100–647, § 1011B(a)(27)(B)1989—Subsec. (b)(5). amended subsec. (b) to read as if amendments by , had not been enacted, see 1988 Amendment note below.

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

Pub. L. 100–647, § 1011B(a)(27)(B)1988—Subsec. (b)(5). , added par. (5) relating to limitation in case of benefits to which section 89 applies.

Pub. L. 100–647, § 1011B(a)(27)(A)Subsec. (c). , added subsec. (c) relating to tax on funded welfare benefit funds which include discriminatory employee benefit plan. Former subsec. (c) redesignated (d).

Pub. L. 100–647, § 3021(a)(1)(C)(i)Subsec. (c)(1)(B). , substituted “any testing year (as defined in section 89(j)(13))” for “any plan year”, see Codification note above.

Pub. L. 100–647, § 3021(a)(1)(C)(ii)Subsec. (c)(2)(A). , substituted “testing” for “plan” in cls. (i) and (ii), see Codification note above.

Pub. L. 100–647, § 1011B(a)(27)(A)Subsec. (d). , redesignated former subsec. (c) as (d).

Pub. L. 99–5141986—Subsec. (b). 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 Amendment

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

Effective Date of 1988 Amendment

Pub. L. 100–647 Pub. L. 99–514 section 1019(a) of Pub. L. 100–647 section 1 of this titleAmendment by section 1011B(a)(27)(A), (B) of effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .

section 3021(a)(1)(C) of Pub. L. 100–647 section 1151 of Pub. L. 99–514 section 3021(d)(1) of Pub. L. 100–647 section 129 of this titleAmendment by effective as if included in the amendments by , see , set out as a note under .

Effective Date of 1986 Amendment

Pub. L. 99–514 Pub. L. 98–369, div. A section 1881 of Pub. L. 99–514 section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date

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

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514Jan. 1, 1989section 1140 of Pub. L. 99–514 section 401 of this titleFor 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 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 , as amended, set out as a note under .