Defined Contribution Retirement Plans Including Employee Stock Ownership Plans

Abstract

This chapter reflects the accounting, reporting, and auditing of defined contribution retirement plans, the accounting, reporting, and auditing specific to Employee Stock Ownership Plans (ESOPs), and regulations, administration, and operation of an ESOP. The benefit a participant will ultimately receive is based upon his or her vested account balance at the time of payment. An understanding of these roles and responsibilities can be obtained from the plan document, collective bargaining agreement, trust document, service agreements, insurance contracts, internal policies and procedures manuals, and IRS regulations. Many DC plans with participant‐directed investment programs also offer a self‐directed program to participants. A self‐directed program is one that allows participants to invest their account balances in any investment, as permitted by the plan and in accordance with ERISA. The plan sponsor may experience difficulty in obtaining self‐directed investment information by type and self‐directed brokerage account investment income such as net appreciation or depreciation separate from interest and dividends from plan service providers because often the service providers prepare reports that include the information as a single line item.