Our company has recently acquired another company which has two segments and two different pension plans. These segments could create reporting issues which we would want to eliminate. To fulfill this objective, we should first understand what the different postretirement plans are and what their reporting requirements are after which we would identify steps to eliminate the two segments.
* Defined Benefit Pension Plan
In a defined benefit pension plan, employee gets a specified monthly benefit at retirement. The amount of benefit may be decided by the company based on the salary and service level of the employee. The reporting requirement for this pension plan is to include ...view middle of the document...
The purpose of the plan is to provide information about the plan and performance of its investments. The report usually includes the following:
* Description of significant activities for the period, any changes in the plan and the corresponding effect of the change
* Plan membership and terms and conditions
* Statements reporting on the transactions and investment performance for the period and the financial position of the plan at the end of the period
* Description of investment policies
Other Postretirement Plans
* Simplified Employee Pension Plan
A Simplified Employee Pension Plan (SEP) is another relatively uncomplicated retirement saving vehicle. A SEP allows employees to make contributions on a tax-favored basis to individual retirement accounts (IRAs) owned by the employees. This plan is subject to minimum reporting and disclosure requirements. To use this plan, employee must set up an IRA to accept employer’s contributions. Employees can set up salary reduction SEP which is a SIMPLE IRA with salary reduction contributions.
Following are the reporting guidelines for SEP:
* Salary Reduction Simplified Employee Pension (SARSEP) contributions should not be included in the wages, tips, or in other compensation of the employee
* Salary reductions are subject to social security and Medicare taxes
* Salary reductions are also subject to Federal Unemployment Taxes
* Profit sharing plans or Stock bonus plan
A profit sharing plan or stock bonus plan is a...