FASB Proposes Discount-Rate Rule for Market-Return Cash Balance Plans, Seeking Comments by Aug. 10
Updated
Updated · KPMG Newsroom · Jun 11
FASB Proposes Discount-Rate Rule for Market-Return Cash Balance Plans, Seeking Comments by Aug. 10
1 articles · Updated · KPMG Newsroom · Jun 11
Summary
June 10’s exposure draft would require certain market-return cash balance plans to use the assumed interest crediting rate—not a fixed-income-based rate—to measure benefit obligations.
ASC 715-30 now points entities to high-quality fixed-income yields, but for these plans that often produces obligations higher than hypothetical account balances and can misstate settlement cost.
The proposal applies when benefits are presented as account balances tied to investable market returns and participants can elect lump-sum payments; outside that narrow scope, accounting would stay unchanged.
Aug. 10 is the comment deadline, while the eventual effective date will be set after feedback; early adoption would be allowed with prospective transition at the next pension measurement date.