As plans which meet certain criteria must be separately audited, this can be an important code to follow to ensure compliance.
Defined contribution plans, while simpler than defined benefit plans, are still highly important for the employees receiving the benefit. From a company perspective, defined contribution plans are such because the company only contributes a certain dollar amount and then absolves responsibility for what happens to it after that. Employees usually elect how to invest these contributions and depending on investment performance, they may either be better or worse off than a defined benefit pension plan.
Reporting Loans under ASC 962
Under many defined contribution retirement plans, it should be noted that the option exists for a participant to take out a loan against the contributions they have made into the plan. Because it is of importance to the other plan members how much of the assets are loaned out, the requirement exists to disclose the amount of loans which have been disbursed under the plan. These are classified as notes receivable in the financial statements. These also must be reported separately from the plan assets, and therefore are not reported at fair value.
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