ASU 2010-25 -- Reclassifies Participant Loans

Prior to 12/15/10, participant loans were classified as investments in an Employee Benefit Plan. Effective for periods ending after December 15, 2010, ASU 2010-25 Plan Accounting – Defined Contribution Pension Plans (Topic 962) amends the ASC to reclassify participant loans from investments to notes receivable from participants. Participant loans are no longer subject to ASC 820 disclosure requirements. The provisions of ASU 2010-25 are to be applied retrospectively to all prior periods presented.

Under ASU 2010-25, current year and prior year participant loans should be classified as Notes Receivable from Participants under the Receivables section of the balance sheet. Appropriate disclosure of the Notes Receivable from Participants will need to be made in the Significant Accounting Policies note disclosure. The Participant loans will no longer be included in the ASC 820 disclosures.

The change in accounting principle will require disclosure in the year the Plan adopts ASU 2010-25. See ASC 250-10-50-1 through 250-10-50-3 for the required disclosures.

Participant loans should still be reported on Form 5500 Schedule H, Line 4i - Schedule of Assets (Held At End of Year).