From ERISA fee disclosures to benefit limitation regulations, 2012 has been a year of regulations for retirement plans. If your company offers a retirement plan, you may feel like you’ve spent the whole year jumping through the hoops that regulators threw at you. Bad news, you might have one more hoop to hop.
Multiemployer Defined Benefit Plans Disclosures
When FASB 715-80 goes into effect on December 15, 2012, it will mean new requirements for companies that are signatory to union contracts that include multiemployer defined benefit plans. Many of the companies impacted by the regulation will be construction companies, who often enter into union contracts which require these types of plans.
FASB 715-80 was issued to address concerns regarding the transparency of employers’ participation in multiemployer pension plans. With these types of multiemployer plans, assets contributed by one employer may be used to provide benefits to employees of other participating employers.
FASB 715-80 Disclosure Requirements
Sharing the wealth also means sharing the risk. If a participating employer fails to make its required contributions, the unfunded obligations of the plan may be borne by the remaining participating employers. Because of the potential liabilities, users of financial statements (like banks and bonding companies) have requested additional disclosures. Their hope is that the disclosures will lead to increased awareness of the commitments and risks involved with participating in multiemployer pension plans.
So, what does FASB 715-80 mean you? If your company is signatory to union contracts that include multiemployer defined benefit plans, you’ll need to make the following additional disclosures:
- A description of the nature of the plan benefits
- A qualitative description of the extent to which the employer could be responsible for the obligations of the plan
- Other quantitative information about the plan, such as total plan assets, actuarial present value of accumulated plan benefits, and total contributions received by the plan
Note that the current recognition and measurement guidance for employers participating in multi-employer plans has not changed. FASB 715-80 disclosures are in addition to, not in place of, currently required disclosures.
FASB 715-80 Disclosure Help
If your company is subject to FASB 715-80, start planning now for the new disclosure requirements. Need help preparing the disclosures? Contact Rea & Associates. Our employee benefits plan services team will help you prepare the required information, ensuring that you stay of the right side of FASB, your bank, and your bonding company.