{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/962/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"962","title":"Plan Accounting—Defined Contribution Pension Plans","area":"Industry","group":"96X Plan Accounting","subtopics":[{"number":"962-10","topic":"962","title":"Overall","area":"Industry","paragraphs":18,"summary":"ASC 962-10 is the Overall subtopic for financial reporting **by** a defined contribution pension plan itself (not by the sponsoring employer, which follows Topic 715). Its objective is to provide information useful in assessing the plan's present and future ability to pay benefits when due; because plan net assets available for benefits equal the sum of participants' individual account balances, those net assets are measured and reported at values meaningful to users—principally the amount a participant could currently withdraw, borrow, or transfer. It applies to all employee benefit plans providing benefits based on amounts contributed to an employee's individual account, and not to defined benefit plans (Topic 960) or health and welfare plans (Topic 965).","concepts":["defined contribution pension plan","plan financial statements","net assets available for benefits","participant individual account balances","ability to pay benefits when due","erisa reporting","plan versus employer accounting"],"categories":["Industry-specific","Compensation and benefits","Financial statement presentation","Subsequent measurement"],"level":"intermediate","topic_title":"Plan Accounting—Defined Contribution Pension Plans","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"962-10-00-1","para":"00-1","html":"The following table identifies the changes made to this Subtopic.
The Codification contains several Topics for the accounting and reporting by a plan (as opposed to an employer) due to the differing accounting treatment for various forms of employee benefit plans. The Compensation Topics address the accounting and reporting by the employer. The Plan Accounting Topics include:
- a
Plan Accounting—Defined Benefit Pension Plans, Topic
960 - b
Plan Accounting—Defined Contribution Pension Plans, (this Topic)
- c
Plan Accounting—Health and Welfare Benefit Plans, Topic
965.
Additionally, Topic 715 addresses financial accounting and reporting for an employer that offers pension, other postretirement, and certain special or contractual termination benefits to its employees. The Plan Accounting—Defined Contribution Pension Plans Topic includes the following Subtopics:
- a
Overall
- b
Terminating Plans
- c
Presentation of Financial Statements
- d
Notes to Financial Statements
- e
Receivables
- f
Investments—Other.
The Overall Subtopic provides guidance on the accounting and reporting for defined contribution pension plans.
Information relevant to the primary users of defined contribution plan financial statements—plan participants—is different from that which is relevant to users of defined benefit plan financial statements. In defined contribution plans, plan participants have a greater 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. Consistent with the objective of a defined contribution plan's financial statements, net assets available for benefits of defined contribution plans should be measured and reported at values that are meaningful to financial statement users.
Information that is useful to plan participants includes the amount they would receive currently if they were to withdraw or borrow funds from or transfer funds within the plan.
The primary users of a defined contribution plan's financial statements include all of the following: - a
- b
Plan participants
- c
The following governmental regulators:
- 1
The U.S. Department of Labor
- 2
The Internal Revenue Service (IRS)
- 3
The Securities and Exchange Commission (SEC).
Defined contribution pension plans are generally subject to certain of the reporting and other requirements of The Employee Retirement Income Security Act of 1974. In addition to establishing certain minimum standards for participation, vesting, and funding for employee benefit plans of private entities, the Act also requires annual reporting of certain information to particular governmental agencies and summarized information to plan participants. For many plans, the reporting requirements include financial statements prepared in conformity with generally accepted accounting principles (GAAP).
The reporting requirements of the Act, except for certain particular references, are not included in the Codification, but they should nonetheless be considered by those responsible for the preparation of defined contribution plan financial statements.
The primary objective of a defined contribution plan's financial statements is to provide information that is useful in assessing the plan's present and future ability to pay benefits when they are due. In a defined contribution plan, the plan's net assets available to pay benefits equal the sum of participants' individual account balances. Accordingly, benefits that can be paid by the plan when they are due relate to the value of the assets that may currently be made available to the individual participants. The Subtopics within the Plan Accounting—Defined Contribution Pension Plans Topic only provide incremental guidance for the entities defined in this Scope Section, or as further defined in the Scope Sections of the individual Plan Accounting—Defined Contribution Pension Plans Subtopics.
The guidance in this Topic applies to all entities that are employee benefit plans that provide
benefits based on amounts contributed to an employee's individual account.
The guidance in this Topic does not apply to the following entities:
- a
Defined benefit pension plans (see Topic
960)
- b
Health and welfare benefit plans that are not also defined contribution plans (see Topic
965).
Paragraph superseded on 07/05/2017 after the end of the transition period stated in Accounting Standards Update No. 2015-12 (Part I), Plan Accounting (Topics 962 and 965): Fully Benefit-Responsive Investment Contracts.
Paragraph superseded on 07/05/2017 after the end of the transition period stated in Accounting Standards Update No. 2015-12 (Part II), Plan Accounting (Topics 960, 962, and 965): Plan Investment Disclosures.
Paragraph superseded on 07/05/2017 after the end of the transition period stated in Accounting Standards Update No. 2015-12 (Part III), Plan Accounting (Topics 960, 962, and 965): Measurement Date Practical Expedient.
Paragraph superseded on 07/20/2020 after the end of the transition period stated in Accounting Standards Update No. 2017-06, Plan Accounting (Topics 960, 962, and 965): Employee Benefit Plan Master Trust Reporting.
The following table identifies the changes made to this Subtopic.
This Subtopic provides guidance for
defined contribution plans that are
terminating plans.
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic (see Section
962-10-15).
If the liquidation of a plan is deemed to be imminent (as defined in paragraph 205-30-25-2) before the end of the plan year, the plan's year-end financial statements shall be prepared using the liquidation basis of accounting in accordance with Subtopic 205-30. Plan financial statements for periods ending after the determination that liquidation is imminent are prepared using the liquidation basis of accounting.
When the decision has been made to terminate a plan or when a wasting trust (that is, a plan under which participants no longer accrue benefits but that will remain in existence as long as necessary to pay already accrued benefits) exists, the relevant circumstances shall be disclosed in all subsequent financial statements issued by the plan.