DEFINED-BENEFIT PENSION PLAN

HISTORY, DESCRIPTION, AND ASSESSMENT OF 412(I)

A wide variety of pension plan types exists in the United States. While the pension plan types are designated by textual descriptions (such as defined-benefit, defined-contribution, and other functional descriptions), numerical designations based on the section of the Internal Revenue Code that regulated pension plans for federal income tax purposes also are widely used. This research focuses on the Section 412(I) pension plan type, which is a fully-insured, defined-benefit plan (Fitzpatrick and Fisher, 1991, p. 52).

The history of the fully-insured, defined-benefit pension plan is reviewed in this research. As this plan type is integral to the general pension structure in the United Stated (particularly in relation to federal income taxation), the historical review encompasses the broad structure of pension plans in the United States. The fully-insured, defined benefit pension plan also is described in this study. Rules and regulations applicable to the pension plan type are discussed. Further, accounting and funding issues are considered. The functioning of the 412(i) pension plan type is understood best through comparison with other pension plan types, and such comparisons are included in this study. Lastly, the fully-insured, defined-benefit pension plan is assessed in this study. The advantages and disadvantages of this pension plan type are compared w

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iabilities and funding now must be reflected on corporate financial statements. In the corporate financial statements, a liability is shown on the balance sheet for an excess of the actuarial value of pension benefit obligations over the value of pension fund assets, while an asset is shown on the balance sheet when the value of pension fund assets exceeds the actuarial value of pension benefit obligations. Pension fund accounting in the United States is governed by Statement of Financial Accounting Standards No. 87: Employers' Accounting for Pensions (Financial Accounting Standards Board, 1985, p. 1). The essence of the Statement involves the application of accrual accounting principles to pension fund accounting by employers, with a special emphasis on the single employer defined-benefit plan. Pension fund accounting in the United States is also affected by Statement of Financial Accounting Concepts No. 1: Objectives of Financial Reporting by Business Enterprises (FAC 1), Statement of Financial Accounting Concepts No. 2: Qualitative Characteristics of Accounting Information (FAC 2), and Statement of Financial Accounting Concepts No. 6: Elements of Financial Statements (FAC6). FAC 1 requires that financial reporting in the U
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Approximate Word count = 5796
Approximate Pages = 23 (250 words per page)

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