[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.404(a)-1T]

[Page 431]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.404(a)-1T  Questions and answers relating to deductibility of 
deferred compensation and deferred benefits for employees. (Temporary)

    Q-1: How does the amendment of section 404(b) by the Tax Reform Act 
of 1984 affect the deduction of contributions or compensation under 
section 404(a)?
    A-1: As amended by the Tax Reform Act of 1984, section 404(b) 
clarifies that section 404(a) shall govern the deduction of 
contributions paid and compensation paid or incurred by the employer 
under a plan, or method or arrangement, deferring the receipt of 
compensation or providing for deferred benefits to employees, their 
spouses, or their dependents. See section 404(b) and Sec. 1.404(b)-1T. 
Section 404 (a) and (d) requires that such a contribution or 
compensation be paid or incurred for purposes of section 162 or 212 and 
satisfy the requirements for deductibility under either of those 
sections. However, notwithstanding the above, section 404 does not apply 
to contributions paid or accrued with respect to a ``welfare benefit 
fund'' (as defined in section 419(e)) after July 18, 1984, in taxable 
years of employers (and payors) ending after that date. Also, section 
463 shall govern the deduction of vacation pay by a taxpayer that has 
elected the application of such section. For rules relating to the 
deduction of contributions paid or accured with respect to a welfare 
benefit fund, see section 419, Sec. 1.419-1T and Sec. 1.419A-2T. For 
rules relating to the deduction of vacation pay for which an election is 
made under section 463, see Sec. 301.9100-16T of this chapter and Sec. 
1.463-1T.

[T.D. 8073, 51 FR 4320, Feb. 4, 1986, as amended by T.D. 8435, 57 FR 
43896, Sept. 23, 1992]