Code section 419A
Code Section 419A controls the deductible contributions that may be made to qualified asset accounts.
419A(c)(2) permits a deduction for contributions to a “reserve funded over the working lives of the covered employees … for post-retirement medical benefits to be provided to covered employees.”
In several cases, the IRS has disallowed deductions under § 419A(c)(2) after “prefunding” contributions for retiree medical benefits were spent soon after being made. The IRS considers these “reserves” to be shams, and its position has been repeatedly upheld in court.
Qualified asset account limitation of additions to account. (Temporary)
Qualified asset account limitation for collectively bargained funds. (Temporary)