Project Update

EITF Issue No. 15-C: Employee Benefit Plan Simplifications

Last updated on August 25, 2015. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)


The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective and Background
*Due Process Documents
*Decisions Reached at Last Meeting
*EITF/Board Meeting Dates
*Contact Information

Project Objective and Background

In January 2013, certain members of the Financial Accounting Standards Board (FASB) and the staff met with members of the AICPA Employee Benefit Plan Expert Panel (AICPA EBP EP), the AICPA EBP Audit Quality Center Executive Committee, and the AICPA staff to discuss the specialized nature of employee benefit plans and how plan accounting should be addressed within the standard-setting process. The FASB received a discussion memorandum from the AICPA EBP EP: Observations about Current Employee Benefit Plan Accounting in October 2013. The purpose of that memo was to provide the FASB with observations regarding areas in current plan accounting that do not consider the specialized characteristics of employee benefit plans and where there are challenges in practice.

In response to some of the issues raised in that memo, an employee benefit plan project was added to the EITF agenda in November 2014, to address certain differences between Topic 820, Fair Value Measurement, and the plan accounting topics (Topics 960, 962, and 965) with respect to the amount of detail to be disclosed about plan assets. In addition, the project will consider a measurement simplification for fully benefit-responsive investments and a measurement date practical expedient that allows employers to measure defined benefit plan assets on a date that is nearest to the employer’s fiscal year-end when the plan’s fiscal year-end does not coincide with a month-end.

At its November 5, 2014 meeting, the Board voted to add this project to the EITF’s agenda.

*Due Process Documents

On April 23, 2015, the Board issued three proposed Accounting Standards Updates, Plan Accounting (Topics 960, 962, and 965)—(I) Fully Benefit-Responsive Investment Contracts, (II) Plan Investment Disclosures, and (III) Measurement Date Practical Expedient. The comment period ended May 18, 2015. On July 31, 2015, the Board completed this project with the issuance of Accounting Standards Update, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the Emerging Issues Task Force).

*Decisions Reached at Last Meeting (July 9, 2015)

The Board ratified the consensus reached at the June 18, 2015 EITF Meeting. The Board directed the staff to draft a final Accounting Standards Update to reflect the consensus for vote by written ballot.

Issue I: Fully Benefit-Responsive Investment Contracts

After considering feedback received on the proposed Update, the Task Force reached a consensus that requires that fully benefit-responsive investment contracts be measured, presented, and disclosed only at contract value, which maintains the relevant information while reducing the cost and complexity of reporting for fully benefit-responsive investment contracts. Plans will continue to provide disclosures that help users understand the nature and risks of fully benefit-responsive investment contracts.

Issue II: Plan Investment Disclosures

GAAP requires plans to disclose (1) individual investments that represent 5 percent or more of net assets available for benefits and (2) the net appreciation or depreciation for investments by general type. The Task Force reached a consensus that eliminates those requirements for both participant-directed investments and nonparticipant-directed investments. The net appreciation or depreciation in investments for the period still will be required to be presented in the aggregate, but will no longer be required to be disaggregated and disclosed by general type. The consensus also requires that investments (both participant-directed investments and nonparticipant-directed investments) of employee benefit plans be grouped only by general type, eliminating the need to disaggregate the investments in multiple ways. In addition, if an investment is measured using the net asset value per share (or its equivalent) practical expedient in Topic 820 and that investment is in a fund that files a U.S. Department of Labor Form 5500, Annual Return/Report of Employee Benefit Plan, as a direct filing entity, disclosure of that investment’s strategy will no longer be required.

Issue III: Measurement Date Practical Expedient

The Task Force reached a consensus that provides a practical expedient to permit employee benefit plans to measure investments and investment-related accounts (for example, a liability for a pending trade with a broker) as of a month-end date that is closest to the plan’s fiscal year-end, when the fiscal period does not coincide with month-end. If a plan applies the practical expedient and a contribution, distribution, and/or significant event occurs between the alternative measurement date and the plan’s fiscal year-end, the plan should disclose the amount of the contribution, distribution, and/or significant event. The plan also should disclose the accounting policy election and the date used to measure investments and investment-related accounts.

*EITF/Board Meeting Dates

The EITF and Board meeting minutes are provided for the information and convenience of constituents who want to follow the EITF’s and the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future EITF or Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

Meeting Date Meeting Materials
*July 9, 2015
Board Meeting
EITF Ratification Minutes
*June 18, 2015
EITF Meeting
EITF Meeting Minutes
Issue Summary
April 7, 2015
Board Meeting
EITF Ratification Minutes
*March 19, 2015
EITF Meeting
EITF Meeting Minutes
Issue Summary
January 22, 2015
EITF Education Session
EITF Education Session Slides
November 5, 2014
Board Meeting
 
Agenda Prioritization Minutes

*Contact Information

Mark Pollock
EITF Coordinator
mapollock@fasb.org

Lisa Muehlbauer
Assistant Project Manager
lamuehlbauer@fasb.org

Justin Gwizdala
Postgraduate Technical Assistant
jngwizdala@fasb.org