During 2018, FASB issued accounting standard update 2018-13 that is effective for plan years beginning after December 15, 2019, with early adoption permitted. This update relates to fair value measurement and its purpose is to help improve the footnote disclosures for the users of the financial statements. The changes prescribed in this update most likely to impact retirement plan financial statements include:

• Disclosure of the adoption of the accounting pronouncement, if applicable
• Elimination of the Level 3 rollforward for nonpublic entities
  1. In place of the Level 3 rollforward, disclosure is required related to the purchases, issuances, and transfers in and out of Level 3 investments.

Other provisions include:

• Removal of certain disclosures including: the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; the valuation process for Level 3 fair value measurements and for nonpublic entities, the changes in unrealized gains and losses for recurring Level 3 investments held at year end.
• Modifications to disclosures include those related to investments in certain entities that calculate net asset value with respect to the timing of liquidation of an investee’s assets and clarification of timing of any measurement uncertainty disclosure.
• Addition of certain disclosures for public entities including changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements, and more flexibility related to disclosure of range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

If interested in discussing this standard update and the impact on your plan’s financial statements, please call (603) 658-8000 and you will be connected with a team member.