AICPA Issues Proposed SOP on Defined Benefit Plans

The AICPA has issued a proposed Statement of Position that specifies the accounting for, and disclosure of, 401(h) features of both defined benefit pension plans and health and welfare benefit plans. Comments are due by December 9.
The proposed SOP, which would amend the AICPA audit and accounting guide, Audits of Employee Benefit Plans, requires:

* Defined benefit pension plans to record assets held in a 401(h) account related to health and welfare plan obligations for retirees as both assets and liabilities on the face of the statement of net assets available for pension benefits in order to arrive at net assets available for pension benefits;

* 401(h) account assets used to fund health and welfare benefits, and the accounts' changes, to be reported in the financial statements of the health and welfare benefit plan, and benefit obligations related to the 401(h) account to be reflected in the health and welfare plan financial statements;

* Defined benefit pension plans to disclose in the notes to the financial statements the nature of the assets related to the 401(h) account, and the fact that the assets are available only to pay retirees' health benefits; and

* Health and welfare benefit plans to disclose in the notes to the financial statements the fact that retiree health benefits are funded partially through a 401(h) account of the defined benefit pension plan.