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Reading and understanding employee benefit plan financial statements.

David C Lee1, Michael A Van Sertima

  • 1Mitchell & Titus, LLP, New York, USA.

Employee Benefits Journal
|April 9, 2004
PubMed
Summary

Understanding audited financial statements for employee benefit plans with over 100 participants is crucial. This guide clarifies their structure and content for better fiduciary oversight.

Area of Science:

  • Employee benefits
  • Financial accounting
  • Retirement plan administration

Background:

  • Employee benefit plans with over 100 participants require audited financial statements for Form 5500 filings.
  • These statements are vital for assessing the financial health of a plan.
  • Fiduciary responsibility includes understanding these financial documents.

Purpose of the Study:

  • To provide an overview of audited financial statements for employee benefit plans.
  • To enhance understanding of the basic structure and content of these statements.
  • To explain complex aspects, such as actuarial tables.

Main Methods:

  • Review of financial statement components.
  • Explanation of standard accounting principles for benefit plans.

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  • Focus on Taft-Hartley (multiemployer) plans, with broader applicability.
  • Main Results:

    • Financial statements offer key insights into plan financial health.
    • Understanding statement structure improves information extraction.
    • Actuarial tables and other complex elements are explained.

    Conclusions:

    • Comprehending audited financial statements is essential for plan fiduciaries.
    • This article serves as a guide to interpreting these critical documents.
    • The information is applicable to various employee benefit plans, particularly multiemployer plans.