To determine whether a pension plan is overfunded or underfunded, a company must compare the:
A)fair market value of the pension plan assets to the projected benefit obligation.
B)cost of the pension plan assets to the accumulated benefit obligation.
C)accumulated benefit obligation to the plan's anticipated obligations.
D)fair market value of the pension plan assets to the accumulated benefit obligation.

Question

Quizplus · Accepted Answer

The correct comparison to determine if a pension plan is overfunded or underfunded is between the fair market value of the pension plan assets and the projected benefit obligation (PBO). This comparison reflects the plan's funding status by considering the present value of all future pension benefits earned by employees to date.

To Determine Whether a Pension Plan Is Overfunded or Underfunded