§ 4976. — Taxes with respect to funded welfare benefit plans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 26USC4976]
TITLE 26--INTERNAL REVENUE CODE
Subtitle D--Miscellaneous Excise Taxes
CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
Sec. 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.
(Added Pub. L. 98-369, div. A, title V, Sec. 511(c)(1), July 18, 1984,
98 Stat. 861; amended Pub. L. 99-514, title XVIII, Sec. 1851(a)(11),
Oct. 22, 1986, 100 Stat. 2861; Pub. L. 100-647, title I,
Sec. 1011B(a)(27)(A), (B), title III, Sec. 3021(a)(1)(C), Nov. 10, 1988,
102 Stat. 3487, 3626; Pub. L. 101-140, title II, Sec. 203(a)(2), Nov. 8,
1989, 103 Stat. 830.)
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, Sec. 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, Sec. 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, Sec. 1011B(a)(27)(A), had not been
enacted, see 1988 Amendment note below.
1988--Subsec. (b)(5). Pub. L. 100-647, Sec. 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, Sec. 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, Sec. 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, Sec. 3021(a)(1)(C)(ii),
substituted ``testing'' for ``plan'' in cls. (i) and (ii), see
Codification note above.
Subsec. (d). Pub. L. 100-647, Sec. 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.''
Effective Date of 1989 Amendment
Amendment 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 Amendment
Amendment 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 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.
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, 1989
For provisions directing that if any amendments made by subtitle A
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII
[Secs. 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.
