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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.
The Financial Accounting Standards Board (FASB) has agreed to postpone until 2009 the effective date of the changes it is making in Financial Accounting Statement (FAS) No. 132(R)-a, Employers’ Disclosures about Postretirement Benefit Plan Assets. In coming to this decision at its September 24, 2008 board meeting, the FASB members acknowledged that their deliberations have been slower than expected. The original effective date would have been for fiscal years ending after December 15, 2008, which now has been shifted to fiscal years ending after December 15, 2009.
At the meeting, the board agreed to four objectives for disclosing information about plan assets in order to provide users of financial information with an understanding of (1) the nature and characteristics of the major categories of assets held in an employer’s plan(s); (2) how investment allocation decisions are made by management, including the factors that are pertinent to an understanding of the employer’s investment policies or strategies; (3) known or potential significant concentrations of risk within plan assets; and (4) the inputs and valuation techniques used to measure the fair value of plan assets.
Disclosure of categories of plan assets must go beyond the broad categories of equity and fixed income. The board believes that “employers should disclose the fair value of categories of plan assets based on the types of assets held in the plan, with further disaggregation of asset categories based on management’s investment policies and strategies. For example, the category of common stocks could be further disaggregated between large-cap, mid-cap, and small-cap common stocks.” The FASB staff believes that the list of asset categories “should include a category for investment funds segregated by type of fund (for example, hedge funds would be a separate category from mutual funds).” A detailed list of categories will be part of the final statement.
Disclosure of concentrations of risk continues to be controversial because of the cost needed to provide these figures and the fact that some entities, such as hedge funds, will refuse to provide such data. One suggestion would require the disclosure of significant concentrations of risk that have been discussed with a company’s management, a committee of the board, or individuals who are responsible for making investment allocation decisions. The FASB staff believes that such disclosure would be confusing.
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