GASB on Friday proposed new guidance that would clarify the accounting and financial reporting of Internal Revenue Code Sec. 457 deferred compensation plans.
In an exposure draft titled Internal Revenue Code Section 457 Deferred Compensation Plans That Meet the Definition of a Pension Plan and Supersession of GASB Statement 32, GASB recommends that if a Sec. 457 deferred compensation plan meets GASB’s definition of a pension plan, then the appropriate GASB pension standards should be applied to the financial reporting for that plan and for the benefits provided through that plan. Current GASB guidance explicitly excludes Sec. 457 plans from the pension standards.
The proposed guidance also would supersede the remaining provisions of GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, as amended, regarding investment valuation requirements for Sec. 457 plans. The proposal would require investments of all Sec. 457 plans to always be valued as of the end of the plan’s reporting period, as GASB requires for all other post-employment benefit plans.
The provisions detailed in the ED would go into effect for all reporting periods in fiscal years beginning after Dec. 15, 2020. GASB would encourage early application.
Comments on the ED are due by Sept. 27.
— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.