Benefit responsiveness definition
Benefit responsiveness means that plan participants transact at book value (principal plus accrued interest), and is provided through one or more different types of investment contracts. Benefit responsiveness criteria are established by the Financial Accounting Standards Board (FASB) in FSP AAG INV-a and all five requirements must be met. The requirements are: (1) the investment contract is directly between the fund and the issuer and prohibits the fund from assigning or selling the contract or its proceeds to another party without the consent of the issuer; (2) repayment of principal and interest credited to participants in the fund is a financial obligation of the issuer or the contract is a synthetic GIC guaranteed by a financially responsible third party (if realization of full contract value for a particular investment contract is not or no longer probable, the investment contract is not considered fully benefit-responsive); (3) the terms of the investment contract require all permitted partici- pant-initiated transactions, such as withdrawals for benefits, loans, or transfers to other funds within the plan, with the fund to occur at contract value with no conditions, limits, or restrictions; (4) it is not probable that an event will occur that limits the ability of the fund to transact at contract value with the issuer; and (5) the fund has to allow participants reasonable access to their funds.