WITHUM ERISA KNOWLEDGE CORNER

Increased Fair Value
Disclosure for Level 3
Employee Benefit Plan Assets

by Laura Whitman, CPA, Manager, Employee Benefit Plan Services Group

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Recent revisions to accounting standards on fair value require increased disclosure requirements for Level 3 Plan assets. Level 3 Plan assets are defined as assets that have unobservable inputs and therefore do not have a readily determinable fair value (for example, real estate holdings, private equity funds or certain guaranteed investment contracts). The new disclosures expand upon the reconciliation of beginning to ending balances of Level 3 assets to gross up and report separately the following items:

  • Total realized and unrealized gains and losses
  • Purchases
  • Sales
  • Issuances
  • Settlements
  • Transfers in
  • Transfers out (and the reason for such transfers)

These items can no longer be net into one amount.

Increasing awareness regarding these recent disclosure requirements will better help fiduciaries meet their responsibilities regarding a Planís financial reporting.

The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your planís individual facts and circumstances.

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