20A — December 12 - 18, 2014 — M id A tlantic
Real Estate Journal
T ax I ssues & A ccounting By Ed Opall, CPA, EisnerAmper
The Time is now to obtain information for your Multi-Employer Pension Disclosure
ll contractors (“em- ployers”) utilizing union labor must
ers have no control over the financial management of the union plans that affect its funding status. Many union plans are severely un- derfunded, and the general public has concerns that em- ployers have contingent ex- posure for these obligations. In response to this concern, the Financial Accounting Standards Board (“FASB”) issued a pronouncement for years beginning in 2012 requiring certain financial statement disclosures, in- cluding information to be
obtained from each union. The Pension Protection Act of 2006 requires unions to
the plan is endangered or at a critical status, and if sur- charges are imposed by the
• Red – less than 65% funded Companies are required to disclose the information in its financial statements in a tabular format for all plans that are considered to be significant. That information includes: • The legal name of each plan • Each plan’s employer iden- tification number and plan number • The most recently available certified zone status provided by each plan (see above) • The expiration date of each union’s current collective bargaining agreement • Whether a funding im- provement plan has been implemented, the employ- er paid a surcharge, and whether there are minimum contributions required for future periods • For each period presented in the financial statements, the amount of employer con- tributions to each plan and whether the company pro- vided more than 5% of total contributions to any plan The FASB pronouncement notes that companies shall disclose each plan’s infor- mation based on its most recent public filings. During 2012 and 2013, companies have gotten familiar with the requirements and have adopted processes to obtain this information timely. Rather than wait until the year-end reporting season to obtain this information, we recommend that companies begin gathering the informa- tion as soon as possible. The unions’ business offices are required by law to release this information to partici- pating employers upon re- quest; however, they are not required to release it quickly. A process should begin each fall to request and follow up on requested information well before company finan- cial reporting deadlines. The FASB pronouncement has also enhanced disclosure requirements for significant changes in employer contri- butions from year to year for business combinations and divestitures, changes in contractual employer contri- bution rate, and significant changes in the number of employees in a plan. Ed Opall, CPA, is a director in EisnerAmper LLP Real Estate Services Group. n
participate i n mu l t i - e m p l o y e r pension pro- grams. Em- ployers pay m o n t h l y c o n t r i b u - tions based o n h o u r s
“Many union plans are severely underfunded, and the general public has concerns that employers have contingent exposure for these obligations.”
certify the funding status of the plan annually. Funding notices are required to be released 120 days after the end of the plan year and des- ignate vital information on its funding status, whether
Pension Benefit Guarantee Corp. The funding status is defined as follows: • Green – 80% or more fund- ed • Yellow – more than 65% and less than 80% funded
worked by each covered em- ployee at the contractual rate. Beyond making their required payments, employ-
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