Financial Accounting Standards Board said companies cannot assume for pension accounting purposes that the increase in pension benefits under last years tax law changes will be permanent.
The Economic Growth and Tax Relief Reconciliation Act of 2001 raised the maximum annual pension benefit to $160,000 at age 62, instead of $140,000 at Social Security retirement age, and increased the maximum amount of salary on which companies can base pensions to $200,000 from $170,000.
In its guidance, the IRS said companies should assume the changes are permanent. The FASB, however, said companies must either recognize in their financial statements that the changes in last years tax law will end in 2010, or assume that the higher benefits accrued under the changes last year will be protected, but subsequent benefits will be lower. For now, it said, companies wont be required to disclose what approach theyre taking.