# ASC 960-20-55: Plan Accounting—Defined Benefit Pension Plans — Accumulated Plan Benefits — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/960/20/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:8817d93de9d521d28c9e2022a6100a169aa8d25f290aa8550992dce4f8660362 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 960-20-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/960/20/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [960-20-55-1](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:43b3dec334cbaa6535d286410668e7cab015ff6cddbe56f1e55949d1b73d9e48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For purposes of illustration, the following discussion is in terms of an individual [employee](https://asc.understandingaccounting.org/glossary/e/#employee "A person who has rendered or is presently rendering service."). In practice, such [benefits](https://asc.understandingaccounting.org/glossary/b/#benefits "The monetary or in-kind benefits or benefit coverage to which participants may be entitled under a pension plan or a health and welfare plan (which can include active, terminated, and retired employees or their dependents or beneficiaries). Examples of benefits may include, but are not limited to, health care benefits, life insurance, legal, educational, and advisory services, pension benefits, disability benefits, death benefits, and benefits due to termination of employment.") would be recognized on an aggregate rather than individual basis because it is usually not possible to predict whether and when an individual employee will become disabled (or elect early retirement, die in active [service](https://asc.understandingaccounting.org/glossary/s/#service "Employment taken into consideration under a pension plan. Years of employment before the inception of a plan constitute an employee's past service; years thereafter are classified in relation to the particular actuarial valuation being made or discussed. Years of employment (including past service) before the date of a particular valuation constitute prior service; years of employment following the date of the valuation constitute future service; a year of employment adjacent to the date of valuation, or in which such date falls, constitutes current service."), and so forth). It is, however, possible to estimate the disability (or early retirement, death, and so forth) benefits expected to become payable for a group of employees through the application of appropriate probability factors. The basic principle, however, is the same whether the computations are performed on an aggregate or an individual basis. ##### [960-20-55-2](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:482f5e26a4f33cf48f13c478d588b7aeb44b628481c5b042ceab0b6038aacfb0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For certain types of benefits, the amount attributable to each year of service cannot be directly determined from the plan's provisions. The manner in which such benefits should be considered to accumulate depends on whether the benefit is includable in [vested benefits](https://asc.understandingaccounting.org/glossary/v/#vested-benefits "Benefits for which the employee's right to receive a present or future pension benefit is no longer contingent on remaining in the service of the employer. (Other conditions, such as inadequacy of the pension fund, may prevent the employee from receiving the vested benefit.) Under graded vesting, the initial vested right may be to receive in the future a stated percentage of a pension based on the number of years of accumulated credited service; thereafter, the percentage may increase with the number of years of service or of age until the right to receive the entire benefit has vested."). ##### [960-20-55-3](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:2d62f21eeb6a8c4abc6a2568e6f49954248563673f4cef1485373089053ec995 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To illustrate, assume a plan provides a supplemental early retirement benefit of $200 per month upon early retirement at age 55 with at least 25 years of service, payable from the date of early retirement until age 62 (the eligibility age for collecting Social Security benefits). If that benefit becomes a vested benefit after 25 years of service, it should be considered to accumulate in proportion to the ratio of the number of years of service completed to the [benefit information date](https://asc.understandingaccounting.org/glossary/b/#benefit-information-date "The date as of which the actuarial present value of accumulated plan benefits is presented.") to the projected number of years of service that will have been completed when the benefit first becomes fully vested. Therefore, 1/25 of the $200 benefit (that is, $8) is attributed to each year of service (assuming the employee is expected to render at least 25 years of service). ##### [960-20-55-4](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:f300e54200fcc97201de7a46c04db4be069085f751b3708a732a29dcd222176c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In the case of a benefit that does not become a vested benefit (for example, a $5,000 death benefit that is payable only if death occurs during active service), the benefit should be considered to accumulate in proportion to the ratio of the number of years of service completed at the benefit information date to the number of years of service completed at the estimated time of separation from covered employment. ##### [960-20-55-5](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:42b4313d053e6de55d4d82a5af2366459fdef1f74e8d27d5ac289f8a40fb5714 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if the foregoing $5,000 death benefit is expected to be paid after the 20th year of service (that is, the employee is expected to die at the end of the 20th year of service), 1/20 of the benefit should be attributed to each year of service. Thus, after 5 years of service, the employee's accumulated death benefit is $1,250. In determining the [benefit information](https://asc.understandingaccounting.org/glossary/b/#benefit-information "The actuarial present value of accumulated plan benefits."), such probability factors are used to estimate whether an employee will render at least 25 years of service, and whether and when that employee will elect early retirement. #### Illustrations ##### [960-20-55-6](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:36b9c9cb17f835de0ba393113fe945b0bf1bf41ea6507144ece463cdb1f7c461 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [960-20-25-5(a) through 25-5(b)](https://asc.understandingaccounting.org/asc/960/20/#960-20-25-5). ##### [960-20-55-7](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:b1f0bf55fea88df2c926b2b198cc4ac5d807b4bd0fe3b2528bc2a29287d6b61e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is assumed that the actuary uses a full range of decrements including termination rates and disablement rates at ages below age 65, early retirement rates at ages when eligible below age 65, and normal retirement rates at ages 65 and over. ##### [960-20-55-8](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:3a1aebc567c78d1101a0b6e68b5c063593c16cadd11c78a23ba97f800a6e7e10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example has the following assumptions: 1. a Benefit rate of $10 per month per year of service 2. b Normal retirement at age 65, irrespective of service; retirement not compulsory 3. c Unreduced immediate benefit upon early retirement from active employment at age 62 with 20 years of service 4. d Unreduced immediate benefit upon early retirement from active employment before age 62 with 30 years of service; Social Security make-up benefit of $200 per month payable until age 62 5. e Reduced immediate benefit upon early retirement from active employment after age 55 and before age 62 with 20 years of service; reduction is 4% for each year by which retirement precedes age 62 6. f Unreduced immediate benefit upon total and permanent disability before age 65 with 10 years of service 7. g Deferred vested benefit, commencing at age 65, upon termination with 10 years of service; benefit payments (at full actuarially reduced value) may also be elected to commence as early as age 55 if 20 or more years of service have been completed 8. h Spouse's benefit upon death in service after meeting eligibility requirements for early or normal retirement (30 years of service, age 55 and 20 years of service, or age 65) equal to $5 per month per year of service. ##### [960-20-55-9](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:ef76c4d2f5d7054bd4ee61702629248e61fb8fb09f082bf964d4a76b1843e62d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table illustrates the measurement of [accumulated plan benefits](https://asc.understandingaccounting.org/glossary/a/#accumulated-plan-benefits "Future benefit payments that are attributable under the provisions of a pension plan to employees' service rendered to the benefit information date. Accumulated plan benefits comprise benefits expected to be paid to any of the following: Retired or terminated employees or their beneficiaries Beneficiaries of deceased employees Present employees or their beneficiaries."). - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-F9A17F02-4BC0-4095-A903-74EB8C70B0EA-low.gif) Type of Benefit Payable Upon Separation From Service at Ages Amount of Benefit Benefit Starts at Duration of Benefit Age 25 and 5 Years of Service (1) Deferred Vested 30-49 $50 Age 65 Life (2) Unreduced Early 50-64 50 Retirement Life (3) Social Security Makeup 50-61 33 (a) Retirement To Age 62 (4) Normal 65 and Over 50 Retirement Life (5) Spouse 50 and Over 25 Death in Service Life of Spouse (6) Disability 30-64 50 Disablement Life Age 40 and 5 Years of Service (1) Deferred Vested 45-54 $50 Age 65 Life (2) Reduced Early 55-61 $36 at Age 55 Increasing $2 a Year to age 65 Retirement Life (3) Unreduced Early 62-64 50 Retirement Life (4) Normal 65 and Over 50 Retirement Life (5) Spouse 55 and Over 25 Death in Service Life of Spouse (6) Disability 45-64 50 Disablement Life Age 45 and 10 Years of Service (1) Deferred Vested 45-54 $100 Age 65 Life (2) Reduced Early 55-61 $72 at Age 55 Increasing $4 a Year to Age 61 Retirement Life (3) Unreduced Early 62-64 100 Retirement Life (4) Normal 65 and Over 100 Retirement Life (5) Spouse 55 and Over 50 Death in Service Life of Spouse (6) Disability 45-64 100 Disablement Life Age 50 and 20 Years of Service (1) Deferred Vested 50-54 $200 Age 65 Life (2) Reduced Early 55-59 $144 at Age 55 Increasing $8 a Year to Age 59 Retirement Life (3) Unreduced Early 60-64 200 Retirement Life (4) Social Security Makeup 60-61 133 (a) Retirement To Age 62 (5) Normal 65 and Over 200 Retirement Life (6) Spouse 55 and Over 100 Death in Service Life of Spouse (7) Disability 50-64 200 Disablement Life Age 50 and 30 Years of Service (1) Unreduced Early 50-64 $300 Retirement Life (2) Social Security Makeup 50-61 200 (a) Retirement To Age 62 (3) Normal 65 and Over 300 Retirement Life (4) Spouse 50 and Over 150 Death in Service Life of Spouse (5) Disability 50-64 300 Disablement Life Age 60 and 10 Years of Service (1) Deferred Vested 60-64 $100 Age 65 Life (2) Normal 65 and Over 100 Retirement Life (3) Spouse 65 and Over 50 Death in Service Life of Spouse (4) Disability 60-64 100 Disablement Life (a) "Because this benefit type is one which is includible in the computation of the present value of vested benefits, the $200 monthly benefit is assumed to accrue uniformly over the first 30 years of service (see paragraph 960-20-25-5\[b\]\[2\]). If, on the other hand, there had been specified a benefit that never is includible in the computation of the present value of vested benefits, such as a $200 monthly benefit payable in the event of the employee's death after 30 years of service, the accrued death benefit to be valued in the age 25 and 5 years of service example would have been $33 (5/30 of $200) for death at age 50, $32 (5/31 of $200) for death at age 51, and so forth." ##### [960-20-55-10](https://asc.understandingaccounting.org/asc/960/20/#960-20-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T02:23:03.876Z to 2026-09-10T02:23:03.876Z Record version: sha256:ba8460f5a4adc8564a7a3b139ce1a125cf01e64bd067fbb29bb9fbe1cc9c9e54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If, in this Example, there were a maximum service limit of 30 years applicable at normal or early retirement or disablement, with a pro rata portion of the expected normal retirement benefit payable on vested termination, the only changes in the amount of benefit would be for the deferred vested benefit. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-9DFE1051-02E8-4BF2-B8BE-9A02AD3960CB-low.gif) Age 25 and 5 Years of Service $33 (5/45 of $300) Age 50 and 20 Years of Service $171 (20/35 of $300)