FASB Interpretation No. 3


1. The Employee Retirement Income Security Act of 1974 (commonly referred to as the Pension Reform Act) became law on September 2, 1974. It is principally concerned with the funding of pension plans, the conditions for employee participation and for vesting of benefits, and the safeguarding of employees’ pension rights. Pension plans adopted after January 1, 1974 are subject to the participation, vesting, and funding requirements of the Act for plan years beginning after September 2, 1974. Pension plans in existence on January 1, 1974 are not subject to those requirements until plan years beginning after December 31, 1975, unless earlier compliance is elected.

2. The Financial Accounting Standards Board has analyzed the Act to determine whether there is a need to reconsider APB Opinion No. 8, «Accounting for the Cost of Pension Plans.» As a result of that analysis, the Board has placed the overall subject of pension accounting, including accounting and reporting by pension trusts, on its technical agenda. Pending completion of that project, the Board is issuing this Interpretation to clarify the accounting for the cost of pension plans covered by the Act.

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