104 STAT. 1388-570 PUBLIC LAW 101-508—NOV. 5, 1990 "(1) DEDUCTION LIMITATIONS. —No deduction shall be allowed— "(A) for the transfer of any amount to a health benefits account in a qualified transfer (or any retransfer to the plan under subsection (c)(1)(B)), "(B) for qualified current retiree health liabilities paid out of the assets (and income) described in subsection (c)(1), or "(C) for any amounts to which subparagraph (B) does not apply and which are paid for qualified current retiree health liabilities for the taxable year to the extent such amounts are not greater than the excess (if any) of— "(i) the amount determined under subparagraph (A) (and income allocable thereto), over "(ii) the amount determined under subparagraph (B). "(2) No CONTRIBUTIONS ALLOWED. — An employer may not contribute after December 31, 1990, any amount to a health benefits account or welfare benefit fund (as defined in section 419(e)(1)) with respect to qualified current retiree health liabilities for which transferred assets are required to be used under subsection (c)(1). "(e) DEFINITION AND SPECIAL RULES. —For purposes of this section— "(1) QUALIFIED CURRENT RETIREE HEALTH LIABILITIES. — For purposes of this section— "(A) IN GENERAL. — The term 'qualified current retiree health liabilities' means, with respect to any taxable year, the aggregate amounts (including administrative expenses) which would have been allowable as a deduction to the employer for such taxable year with respect to applicable health benefits provided during such taxable year if— "(i) such benefits were provided directly by the emplover, and (ii) the employer used the cash receipts and disbursements method of accounting. For purposes of the preceding sentence, the rule of section 419(c)(3)(B) shall apply. "(B) REDUCTIONS FOR AMOUNTS PREVIOUSLY SET ASIDE. — The amount determined under subparagraph (A) shall be reduced by any amount previously contributed to a health benefits account or welfare benefit fund (as defined in section 419(e)(1)) to pay for the qualified current retiree health liabilities. The portion of any reserves remaining as of the close of December 31, 1990, shall be allocated on a pro rata basis to qualified current retiree health liabilities. "(C) APPLICABLE HEALTH BENEFITS. —The term 'applicable health benefits' mean health benefits or coverage which are provided to— "(i) retired employees who, immediately before the qualified transfer, are entitled to receive such benefits upon retirement and who are entitled to pension benefits under the plan, and "(ii) their spouses and dependents. "(D) KEY EMPLOYEES EXCLUDED. —I f an employee is a key employee (within the meaning of section 416(i)(l)) with respect to any plan year ending in a taxable year, such employee shall not be taken into account in computing
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