Pension Plans and Their Benefits
Reporting Paper for Pension Plans
Dorothy Forrest
ACC/541Accounting Theory and Research
December 1, 2014
Professor: Thomas Gruber
Memorandum
To: Thomas Gruber, CEO
From: Dorothy Forrest
Date: December 1, 2014
Re: Company Acquisition Mr. Gruber our company has been going through many changes to better the company and a 100% acquisition of a new company will create changes in the retirement benefit plans area. Adjusting benefits plans will be complicated but with the required reporting, the changes will be a smooth process.. This memo will detail the reporting requirements for defined contributions, defined benefits, and other postretirement plans. Included is information on how to report the two segments, if they are kept and what must happen if they are to be eliminated.
Defined Contribution Plan Defined contribution plan is an employee’s retirement benefit plan that an employer promises to periodically make contribution toward. Matching employees’ contribution to the benefit plan is how most companies allocate funds. No promise amounts are made concerning the pay out of the total benefits. Once funds are invested the rates can change and this can decide benefit amounts on the contributions invested funds during the investment period. The defined contribution plan is recorded as a pension expense on the financial statements. All risk is put on the employees because this is a no risk transaction for the employer. Defined Benefit Plan
Defined benefit plan set the retirement benefit amounts an employee would receive but has define set terms. One term set by most companies is in order for employees to receive full benefit it require employees to have 30 years of service, and is between 65-67 which s consider retirement age. Full benefits are average out of an employee highest five year salaries and a employee is only entitle to 60%. The company must calculate to make sure the annual contribution is enough to meet future
Dorothy Forrest
ACC/541Accounting Theory and Research
December 1, 2014
Professor: Thomas Gruber
Memorandum
To: Thomas Gruber, CEO
From: Dorothy Forrest
Date: December 1, 2014
Re: Company Acquisition Mr. Gruber our company has been going through many changes to better the company and a 100% acquisition of a new company will create changes in the retirement benefit plans area. Adjusting benefits plans will be complicated but with the required reporting, the changes will be a smooth process.. This memo will detail the reporting requirements for defined contributions, defined benefits, and other postretirement plans. Included is information on how to report the two segments, if they are kept and what must happen if they are to be eliminated.
Defined Contribution Plan Defined contribution plan is an employee’s retirement benefit plan that an employer promises to periodically make contribution toward. Matching employees’ contribution to the benefit plan is how most companies allocate funds. No promise amounts are made concerning the pay out of the total benefits. Once funds are invested the rates can change and this can decide benefit amounts on the contributions invested funds during the investment period. The defined contribution plan is recorded as a pension expense on the financial statements. All risk is put on the employees because this is a no risk transaction for the employer. Defined Benefit Plan
Defined benefit plan set the retirement benefit amounts an employee would receive but has define set terms. One term set by most companies is in order for employees to receive full benefit it require employees to have 30 years of service, and is between 65-67 which s consider retirement age. Full benefits are average out of an employee highest five year salaries and a employee is only entitle to 60%. The company must calculate to make sure the annual contribution is enough to meet future