# ASC 325-965-05: Investments—Other — Plan Accounting—Health and Welfare Benefit Plans — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/325/965/#05-overview-and-background) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:48:38.968Z to 2026-09-09T23:48:38.968Z Record version: sha256:c2a2338c42aec145e5ce6d5104eb09bddc3c24e98d7f9c25852511d677a578d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 325-965-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/325/965/#05-overview-and-background) SEC content: no ##### [325-965-05-1](https://asc.understandingaccounting.org/asc/325/965/#325-965-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:48:38.968Z to 2026-09-09T23:48:38.968Z Record version: sha256:f1460ab6ec09fe34042c770cf01051d999e5ec66f1bd0e5a8538b44b0dfec383 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on investment and insurance contracts for [health and welfare benefit plans](https://asc.understandingaccounting.org/glossary/h/#health-and-welfare-benefit-plans "Health and welfare benefit plans include plans that provide the following: Any of the following benefits: Medical, dental, visual, psychiatric, or long-term health care Life insurance (offered separately from a pension plan) Certain severance benefits Accidental death or dismemberment benefits. Benefits for unemployment, disability, vacations, or holidays Other benefits such as apprenticeships, tuition assistance, day care, dependent care, housing subsidies, or legal services."). ##### [325-965-05-2](https://asc.understandingaccounting.org/asc/325/965/#325-965-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:48:38.968Z to 2026-09-09T23:48:38.968Z Record version: sha256:07b28e6216ccd6f12a66a6cdd384dc69a1d2dcc9a63212772d03c22f2392d688 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Defined benefit plans](https://asc.understandingaccounting.org/glossary/d/#defined-benefit-plan "A defined benefit plan provides participants with a determinable benefit based on a formula provided for in the plan. Defined benefit health and welfare plans—Defined benefit health and welfare plans specify a determinable benefit, which may be in the form of a reimbursement to the covered plan participant or a direct payment to providers or third-party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits. The level of benefits may be defined or limited based on factors such as age, years of service, and salary. Contributions may be determined by the plan's actuary or be based on premiums, actual claims paid, hours worked, or other factors determined by the plan sponsor. Even when a plan is funded pursuant to agreements that specify a fixed rate of employer contributions (for example, a collectively bargained multiemployer plan), such a plan may nevertheless be a defined benefit health and welfare plan if its substance is to provide a defined benefit. Defined benefit pension plan—A pension plan that defines an amount of pension benefit to be provided, usually as a function of one or more factors such as age, years of service, or compensation. Any pension plan that is not a defined contribution pension plan is, for purposes of Subtopic 715-30, a defined benefit pension plan. Defined benefit postretirement plan—A plan that defines postretirement benefits in terms of monetary amounts (for example, $100,000 of life insurance) or benefit coverage to be provided (for example, up to $200 per day for hospitalization, or 80 percent of the cost of specified surgical procedures). Any postretirement benefit plan that is not a defined contribution postretirement plan is, for purposes of Subtopic 715-60, a defined benefit postretirement plan. (Specified monetary amounts and benefit coverage are collectively referred to as benefits.)") provide participants with a determinable benefit based on a formula provided for in the plans, whereas [defined contribution plans](https://asc.understandingaccounting.org/glossary/d/#defined-contribution-plan "A plan that provides an individual account for each participant and provides benefits that are based on all of the following: amounts contributed to the participant's account by the employer or employee; investment experience; and any forfeitures allocated to the account, less any administrative expenses charged to the plan. Defined contribution health and welfare plans—Defined contribution health and welfare plans maintain an individual account for each plan participant. They have terms that specify the means of determining the contributions to participants' accounts, rather than the amount of benefits the participants are to receive. The benefits a plan participant will receive are limited to the amount contributed to the participant's account, investment experience, expenses, and any forfeitures allocated to the participant's account. These plans also include flexible spending arrangements. Defined contribution postretirement plan—A plan that provides postretirement benefits in return for services rendered, provides an individual account for each plan participant, and specifies how contributions to the individual's account are to be determined rather than specifies the amount of benefits the individual is to receive. Under a defined contribution postretirement plan, the benefits a plan participant will receive depend solely on the amount contributed to the plan participant's account, the returns earned on investments of those contributions, and the forfeitures of other plan participants' benefits that may be allocated to that plan participant's account.") provide benefits based on amounts contributed to an employee's individual account plus or minus all of the following: 1. a Forfeitures 2. b Investment experience 3. c Administrative expenses. ##### [325-965-05-3](https://asc.understandingaccounting.org/asc/325/965/#325-965-05-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:48:38.968Z to 2026-09-09T23:48:38.968Z Record version: sha256:4b0dd20c557a31ec55e36cf99f903144d6aced653a3860dc1977d710c00bcaa3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In such defined contribution plans, plan participants have a vested interest in monitoring the financial condition and operations of the plan since they bear investment risk under these plans, and plan transactions can directly affect their benefits (for example, investment mix, and risk and return). ##### [325-965-05-4](https://asc.understandingaccounting.org/asc/325/965/#325-965-05-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:48:38.968Z to 2026-09-09T23:48:38.968Z Record version: sha256:77b68ab8f74f5beed34ecf66f528a8d69979dd6b81e3e9b0b0d4cf9313197609 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Internal Revenue Code generally requires that all investment experience under defined contribution plans be allocated to individual account balances.