Contribution Deadline for VEBA Contributions

[Guest EMM118]

A corporation established a VEBA on July 21, 2006, but did not fund the VEBA prior to July 31, 2006, the last day of the corporation's fiscal year. Under Code Section 419(a)(2), is the corporation precluded from taking a deduction for the fiscal year ended July 31, 2006. I believe the answer is yes, but I wanted to check any way. Thanks in advance for your responses. Ed

[Ron Snyder]

The provision you refer to doesn't mean what you suggest, as examples under the Regs make clear. Therefore the corporation is not precluded from a deduction under the facts given.

Contributions to a welfare benefit plan are not deductible under IRC §§419 and 419A, but if another IRC § authorizes the deduction, IRC 419 permits inclusion of the "qualified cost", consisting of "the sum of--

(A) the qualified direct cost for such taxable year, and

(B) subject to the limitation of section 419A(b), any addition to a qualified asset account for the taxable year."