FASB Consults On Defined Contribution Pension Plan Update

by Glen Shapiro, LawAndTax-News.com, New York

27 August 2010

The US Financial Accounting Standards Board (FASB) has issued for public comment an exposure draft of a proposed Accounting Standards Update on defined contribution pension plans.

The amendments in this proposed Update would require that participant loans be classified as notes receivable from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued but unpaid interest.

The objective of this proposed Update is to clarify how loans to participants should be classified and measured by defined contribution pension benefit plans. Participant loans are currently classified as an investment in accordance with the defined contribution pension plan guidance. Most investments held by a plan, including participant loans, are currently required to be presented at fair value.

The amendments in this proposed Update would be applied retrospectively to all prior periods presented. The effective date will be determined after feedback on the proposed Update has been considered. Early adoption would be permitted.

Comments are invited up until September 7, 2010.

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