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

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s4976>. Cite pinpoints as 26 U.S.C. § 4976(a)(1).

## § 4976(a) General rule

If—

**§ 4976(a)(1)** an employer maintains a welfare benefit fund, and

**§ 4976(a)(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.

## § 4976(b) Disqualified benefit

For purposes of subsection (a)—

**§ 4976(b)(1) In general.** The term “disqualified benefit” means—

**§ 4976(b)(1)(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,

**§ 4976(b)(1)(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

**§ 4976(b)(1)(C)** any portion of a welfare benefit fund reverting to the benefit of the employer.

**§ 4976(b)(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.

**§ 4976(b)(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)).

**§ 4976(b)(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.

## § 4976(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.

## Regulations

- [Treas. Reg. § 54.4976-1T](/26/reg/54.4976-1T.md): Questions and answers relating to taxes with respect to welfare benefit funds (temporary). (interprets § 4976)

## Connections

Cites: § 419 Treatment of funded welfare benefit plans; § 419A Qualified asset account; limitation on additions to account; § 505 Additional requirements for organizations described in paragraph (9) or (17) of section 501(c); § 512 Unrelated business taxable income

Cited by: none

## Amendments

- 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 861
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2861
- 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3487
- 1989-11-08: [Pub. L. 101-140](/26/act/101-140.md), 103 Stat. 830