5. Retirement Plans

Aims and objectives of this chapter:

• Briefly introduce the concept of pension plans and their importance

• Explain two types of pension plans: defined contribution plans and defined benefit pension plans

• Discuss the influence of the Employee Retirement Income Security Act

• Discuss the accounting issues related to defined contribution plans and defined benefit pension plans

• Explain pension benefit obligations

• Explain pension plan assets and expenses

• Discuss the financial reporting of pension plans

• Address the accounting recordkeeping of pension plans

Pension plans pay a pivotal role in the economy because they are the principal device used by individuals—either through organizationally sponsored arrangements or ...

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