The Company maintains a 401(k) plan for its employees in the United States whereby eligible employees may contribute up to a specified percentage of their earnings, on a pretax basis, subject to the maximum amount permitted by the Internal Revenue Code. Under the 401(k) plan, the Company made discretionary contributions to the plan in 2023 and 2022. For each year ended December 31, 2023 and 2022, the Company recorded an expense of $0.9 million.

The Company maintains a defined contribution plan for its employees in South Korea. Under the defined contribution plan, the Company contributes the equivalent of 8.3% of an employee's gross salary into the plan. For the year ended December 31, 2023, the Company recorded an expense of $1.4 million for the plan as compared to $1.2 million recorded for the year ended December 31, 2022.

The Company sponsors defined benefit plans for its employees in Germany and Japan. Defined benefit plans provide pension benefits based on compensation and years of service. The Germany plans were frozen as of September 30, 2003 and have not been offered to new employees after that date.

The following provides a reconciliation of the changes in benefit obligation, and the funded status at the end of the years (in thousand):


	Years ended December 31,
	2023			2022
Benefit obligation at beginning of year	$	11,021		$	16,527
Service cost		76			100
Interest cost		396			146
Benefits paid		(664	)		(572	)
Actuarial (gain) loss		697			(4,278	)
Foreign currency exchange rate change		276			(902	)
Benefit obligation at end of year		11,802			11,021
Underfunded status at end of year	$	11,802		$	11,021

The Company has recorded the 2023 and 2022 underfunded status as a long-term liability on the consolidated balance sheets. The Company holds pension insurance contracts, with the Company as beneficiary, in the amount of $2.2 million and $2.5 million as of December 31, 2023 and 2022, respectively, related to individuals under the pension plans. The Company records these insurance contracts based on their cash surrender value at the balance sheet dates. These insurance contracts are classified as other assets on the consolidated balance sheet. The Company intends to use any proceeds from these policies to fund the pension plans. However, since the Company is the beneficiary on these policies, these assets have not been designated pension plan assets.

The net periodic benefit cost related to the plans consisted of the following components (in thousands):


	Years ended December 31,
	2023			2022
Service Cost	$	76		$	100
Interest Cost		396			146
Net amortization of net gain (loss)		(244	)		—
Net periodic benefit cost	$	228		$	246

The service cost component of net benefit cost is presented within cost of revenue or selling, marketing, general and administrative expense on the accompanying consolidated statements of comprehensive income (loss), in accordance with where compensation cost for the related associate is reported. All other components of net benefit cost, including interest cost and net amortization noted above, are presented within other income (expense), net in the accompanying consolidated statements of comprehensive income (loss).

The following table presents changes in benefit obligations recognized net of tax in other comprehensive income (in thousands):


	Years ended December 31,
	2023		2022
Amortization of net (gain) loss	$	244	$	—
Actuarial (gain) loss in the current period		697		(4,278	)
Net change during the period	$	941	$	(4,278	)

The increase in the actuarial loss during the year ended December 31, 2023, compared to the year ended December 31, 2022 was mainly due to the decrease in the discount rate, resulting from an decrease in the implicit rate of high-quality fixed income investments. The estimated net loss and prior service cost for the plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is not significant. The Company expects to make no contributions to the plans in 2024.

The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the plans are as follows:


	Years ended December 31,
	2023			2022
Discount rate		3.2	%		3.7	%
Rate of compensation increase		2.0	%		2.0	%

The following benefit payments, which are funded by the Company, are expected to be paid (in thousands):


2024	$	632
2025		655
2026		667
2027		669
2028		616
2029 - 2033	$	3,066