The way I look at it the Over/Under funding is just the fair market value adjusting entry that records the asset/liability with an offsetting equity adjustment (OCI). It's only recorded after all the other DB calculations/projections/assumptions, gains/losses, expenses and actual funding takes place.
As to the prior pension raids it seems like new laws/restrictions were enacted to help safeguard plan assets.
Prepaid Expense to Pension Trust?
The student's question is relatively pedestrian. Ball in my court for one more swat.
Problems:
1. ERISA Trusts are separate entities, federally insured and governed by:
Uniform Principal and Income Act (1997) http://www.law.upenn.edu/bll/archive...ia/upaia97.htm
2. Contributions to irrevocable trust pensions are not "assets" of employing unit*. Or are they?
I could argue the contribution is Never an asset or income. Extreme example dissuades Helse:
"Prepaid expense account". If I decide to prepay the automobile insurance I recognize the asset.
Prepayment of obligation to pension obligation (per Union contract) is a prepaid expense and
legally separated from the contributing entity (employer) when transferred to the pension trust?
* I reserve the right to refute my statement in line 2.
I would say that establishing a DB plan creates a liability. Its that liability that is being adjusted whether its called over/under funded and shown as an asset or liability. Not too different than recording deferred tax assets and liabilities.
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