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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
From Spencer's Benefits Reports: The Financial Accounting Standards Board (FASB) has instructed its staff to issue an FASB Staff Position (FSP) paper by March 7, 2008, that proposes to improve disclosures about postretirement benefit plan assets now required by Financial Accounting Statement (FAS ) No. 132(R), Employers’ Disclosures about Pensions and Other Postretirement Benefits. There will be a 45-day public comment period once the FSP is issued. If adopted, the new requirements would be similar to FAS No. 157, Fair Value Measurements. The FASB proposal, discussed at its February 13 meeting, would make the following three changes in current rules:
First, the proposal would require the disclosure of more asset categories than currently are required. A FASB staff review of 2006 annual reports of many companies in the Standard & Poor’s 500 found that most companies primarily disclose the categories of equity, debt, real estate, and “other.” Amended paragraph 5(d)(1) of FAS No. 132(R) specifically would require that “disclosure of asset categories shall be based on the risks and expected long-term rate of return associated with each asset category.” The amendment would expand the list of asset categories to include “equity securities; debt securities issued by national, state, and local governments; corporate debt securities; mortgage-backed securities; derivatives; and real estate.” In addition, “significant investments in one company, industry, country, or type of security” would need to be disclosed when they involve “concentrations of risk.”
Second, the proposal would require the disclosure of assumptions used to determine the fair value of plan assets. The FASB notes that FAS No. 132(R) already requires the disclosure of assumptions used to determine plan liabilities. The proposal follows requirements already defined in FAS No. 157: the valuation techniques used to measure fair value and the level within the fair value hierarchy in which the fair value measures fall—Level 1, Level 2, or Level 3. As defined by FAS No. 157, Level 1 uses quoted prices in active markets for identical assets or liabilities; Level 2 involves significant other observable inputs; and Level 3 involves significant unobservable inputs. Changes in valuation inputs and assumptions also would have to be disclosed.
Finally, the proposal would reinstate an earlier requirement that a nonpublic entity “disclose the annual amount of net periodic benefit cost recognized.” The FASB had inadvertently removed this requirement from FAS No. 132(R) when it issued FAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.
If adopted, the proposals concerning asset classes and disclosure of assumptions would be effective for years ending after Dec. 15, 2008. The proposal involving nonpublic entity disclosures would be effective upon approval by the FASB.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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