The Financial Accounting Standards Board issued a
These are a kind of cash balance plan in which interest crediting rates are based on investable market returns. Some of FASB's constituents have voiced concerns that the current accounting guidance might not fully reflect the economics of these plans. That means some companies can measure the benefit obligation using a discount rate that produces an amount that's inconsistent with the plan's hypothetical account balance.
"When an entity uses a discount rate other than the assumed interest crediting rate to measure the benefit obligation for those plans, the benefit obligation often is different from the plans' hypothetical account balances (which are made up of principal credits and future interest credits based on those principal credits)," said FASB.
To respond to these stakeholders' concerns, the amendments in the proposed update would specify the discount rate required to be used to measure the benefit obligation for certain market-return cash balance plans.
The proposed update stems from a recommendation by the Emerging Issues Task Force. FASB is asking comments on the proposed update by Aug. 10, 2026.
