Fund Balance: A Comprehensive Guide to Its Legal Definition and Implications

Q: Are all contributions to a retirement fund included in the fund balance?

No, certain contributions, such as those related to specific federal retirement systems, are excluded.

Q: How can I determine the fund balance of my retirement plan?

Consult your plan&#039;s financial statements or speak with your plan administrator for detailed information.

Definition & Meaning

The term fund balance refers to the current net assets of a fund that are available for the payment of benefits. This balance is determined by the relevant authority in accordance with established accounting standards. However, it is important to note that the fund balance does not include amounts related to:

The Federal Employees' Retirement System.
Contributions made under the Federal Employees' Retirement Contribution Temporary Adjustment Act of 1983 by or on behalf of individuals who are part of the Federal Employees' Retirement System.

Table of content

Legal Use & context

Fund balance is primarily used in the context of retirement and pension funds. It plays a crucial role in determining the financial health of these funds and ensuring that there are sufficient assets to meet future benefit obligations. Legal professionals may encounter this term when dealing with matters related to employee benefits, retirement planning, and financial reporting for government entities.

Users can manage their own retirement planning and fund balance inquiries with the help of legal templates and forms provided by US Legal Forms, which are drafted by experienced attorneys.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A state pension fund has a total net asset value of $10 million. After excluding amounts related to the Federal Employees' Retirement System, the fund balance available for benefits is $8 million.

Example 2: An employee contributes to their retirement fund under the Federal Employees' Retirement Contribution Temporary Adjustment Act. The amount they contributed does not count towards the fund balance as defined above. (hypothetical example)

Relevant laws & statutes

The primary statute governing fund balance is found in 5 USCS § 8331, which outlines the definitions and exclusions related to federal retirement systems. No additional specific laws apply directly to the concept of fund balance.

Comparison with related terms

Term	Definition	Difference
Net Assets	The total assets minus total liabilities of a fund.	Fund balance specifically refers to assets available for benefits, while net assets may include liabilities.
Retirement Fund	A fund set up to provide retirement income to employees.	Fund balance is a component of a retirement fund, focusing on the available assets for benefits.

Common misunderstandings

What to do if this term applies to you

If you are involved in managing or contributing to a retirement fund, it is important to understand the fund balance and its implications for future benefits. You can explore US Legal Forms for templates related to retirement planning and fund management. If your situation is complex, consider consulting a legal professional for tailored advice.

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Quick facts

Typical Fees: Varies by fund management.
Jurisdiction: Federal and state laws apply.
Possible Penalties: Mismanagement of funds can lead to legal repercussions.

Key takeaways

Frequently asked questions

What is the difference between fund balance and net assets?

Fund balance specifically refers to the assets available for benefits, while net assets include both assets and liabilities.