Post-Retirement Medical and Life Insurance Reserve

§ 419A. Qualified asset account; limitation on additions to account(a) General ruleFor 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—(1) disability benefits, (2) medical benefits, (3) SUB or severance pay benefits, or (4) life insurance benefits. (b) Limitation on additions to accountNo 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. (c) Account limitFor purposes of this section—(1) In generalExcept 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 benefitsThe 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 severance pay benefits(A) In generalThe 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 plansIn 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 benefitsFor 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 benefitsFor 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).