How to Report Insurance Separate Account on Schedule R?

[Übernerd]

This is a question about line 19 of the new Schedule R. Line 19 requires defined benefit plans to break down their trust holdings by percent of total assets into five separate asset classes (stock, investment-grade debt, etc.). If the plan hold assets in trusts, accounts, mutual funds, or other investment arrangements, line 19 requires the plan to disaggregate the underlying assets.

Plan A's assets include a GAC (a separate account) from Giant Insurance Company. Giant will not provide a breakdown of assets in the contract; instead, it will provide only the fair-market value of the whole contract, as determined under FAS 157 and state insurance law, and as reported on its 10Q and 10K. Giant's rationale is that it owns those underlying assets; all Plan A owns is the contract.

This makes sense to me, but Plan A's auditors (Huge Accounting Firm) aren't convinced that this is sufficient. Huge won't formally opine either, but points to language in the Schedule R instructions that clearly requires disaggregation of assets held in "accounts" and that provides no exception for insurance company separate accounts. We have been asked, at the last minute, to resolve this difference of opinion between Giant and Huge. I haven't had any luck finding more detailed instructions or even any formal discussion of this issue. Any pointers appreciated, as this is a very time-sensitive question. Thanks.

[Andy the Actuary]

If you work on small plans, have no concern: Item 19 applies only to plans with 1,000 or more participants.

[Übernerd]

If you work on small plans, have no concern: Item 19 applies only to plans with 1,000 or more participants.

Thanks, Andy. We're well over 1,000; I should have mentioned that.