9.	Retirement Plans

We sponsor and contribute to defined benefit and defined contribution retirement plans. Our defined benefit pension plan is the Gray Television, Inc. Retirement Plan (the “Gray Pension Plan”). Monthly plan benefits under the Gray Pension Plan are frozen and can

longer increase, and

new participants can be added to the Gray Pension Plan.

The Gray Pension Plan’s funding policy is consistent with the funding requirements of existing federal laws and regulations under the Employee Retirement Income Security Act of

1974.

The measurement dates used to determine the benefit information for the Gray Pension Plan were

December 31, 2018

and

2017,

respectively. The following summarizes the Gray Pension Plan’s funded status and amounts recognized on our consolidated balance sheets at

December 31, 2018

and

2017,

respectively (dollars in thousands):

	December 31,
	2018			2017
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	126,086		$	114,976
Interest cost		4,424			4,669
Actuarial gains		(10,940	)		-
Benefits paid		(2,916	)		(3,529	)
Merger of assumed plans		-			9,970
Projected benefit obligation at end of year	$	116,654		$	126,086

Change in plan assets:
Fair value of pension plan assets at beginning of year	$	88,248		$	80,929
Actual return on plan assets		(4,417	)		7,724
Company contributions		2,500			3,124
Benefits paid		(2,916	)		(3,529	)
Fair value of pension plan assets at end of year		83,415			88,248
Funded status of pension plan	$	(33,239	)	$	(37,838	)

Amounts recognized on our balance sheets consist of:
Accrued benefit cost	$	2,041		$	(1,502	)
Accumulated other comprehensive loss		(35,280	)		(36,336	)
Net liability recognized	$	(33,239	)	$	(37,838	)

Because the Gray Pension Plan is a frozen plan, the projected benefit obligation and the accumulated benefit obligation are the same. The accumulated benefit obligation was

$116.7

million and

$126.1

million at

December 31, 2018

and

2017,

respectively. The long-term rate of return on assets assumption was chosen from a best estimate range based upon the anticipated long-term returns for asset categories in which the Gray Pension Plan is invested. An estimate of the rate of increase in compensation levels used to calculate the net periodic benefit cost is

not

required because of the Plan’s frozen status:

	Year Ended December 31,
	2018			2017
Weighted-average assumptions used to determine net periodic benefit cost for the Gray Pension Plan:
Discount rate		3.55	%		4.11	%
Expected long-term rate of return on pension plan assets		7.00	%		7.00	%
Estimated rate of increase in compensation levels		N/A			N/A

	As of December 31,
	2018			2017
Weighted-average assumptions used to determine benefit obligations:
Discount rate		4.16	%		3.55	%

Pension expense is computed using the projected unit credit actuarial cost method. The net periodic pension cost for the Gray Pension Plan includes the following components (in thousands):

	Year Ended December 31,
	2018			2017			2016
Components of net periodic pension cost:
Service cost	$	-		$	-		$	-
Interest cost		4,424			4,670			4,398
Expected return on plan assets		(6,145	)		(5,648	)		(4,836	)
Recognized net actuarial loss		678			484			406
Net periodic pension benefit	$	(1,043	)	$	(494	)	$	(32	)

For the Gray Pension Plan, the estimated future benefit payments are as follows (in thousands):

Years	Amount
2019	$	3,371
2020		3,845
2021		4,102
2022		4,383
2023		4,648
2024 - 2028		28,479

The Gray Pension Plan’s weighted-average asset allocations by asset category were as follows:

	As of December 31,
	2018			2017
Asset category:
Insurance general account		19	%		19	%
Cash management accounts		1	%		4	%
Equity accounts		47	%		42	%
Fixed income accounts		31	%		31	%
Real estate accounts		2	%		4	%
Total		100	%		100	%

The investment objective is to achieve a consistent total rate of return (income, appreciation, and reinvested funds) that will equal or exceed the actuarial assumption with aversion to significant volatility. The following is the target asset allocation:

	Target Range
Asset class:	Strategic Allocation		Lower Limit		Upper Limit
Equities:
Large cap value		5%		0%		50%
Large cap blend		5%		0%		50%
Large cap growth		5%		0%		50%
Mid cap blend		15%		0%		40%
Small cap core		5%		0%		25%
Foreign large blend		10%		0%		40%
Emerging markets		10%		0%		25%
Real estate		5%		0%		20%
Fixed Income:
U.S. Treasury inflation protected		5%		0%		25%
Intermediate term bond		10%		0%		50%
Long term government bond		5%		0%		40%
High yield bond		10%		0%		25%
Emerging markets bond		10%		0%		20%
Money market taxable		0%		0%		100%

Our equity portfolio contains securities of companies necessary to build a diversified portfolio, and that we believe are financially sound. Our fixed income portfolio contains obligations generally rated A or better with

maturity restrictions and an actively managed duration. The cash equivalents strategy uses securities of the highest credit quality.

Fair Value of Gray Pension Plan Assets

We calculate the fair value of the Gray Pension Plan’s assets based upon the observable and unobservable net asset value of its underlying investments. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized by the fair value hierarchy proscribed by ASU Topic

820,

described in Note

“Fair Value Measurement.”

The following table presents the fair value of the Gray Pension Plan’s assets and classifies them by level within the fair value hierarchy as of

December 31, 2018

and

2017,

respectively (in thousands):

Gray Pension Plan Fair Value Measurements

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Insurance general account	$	-	$	16,458	$	-	$	16,458
Cash management accounts		721		-		-		721
Equity accounts		39,047		-		-		39,047
Fixed income accounts		25,878		-		-		25,878
Real estate accounts		1,311		-		-		1,311
Total	$	66,957	$	16,458	$	-	$	83,415

	As of December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Insurance general account	$	-	$	16,873	$	-	$	16,873
Cash management accounts		3,229		-		-		3,229
Equity accounts		37,536		-		-		37,536
Fixed income account		27,146		-		-		27,146
Real estate accounts		3,464		-		-		3,464
Total	$	71,375	$	16,873	$	-	$	88,248

Expected Pension Contributions.

We expect to contribute a combined total of approximately

$2.5

million to our frozen defined benefit pension plan during the year ending

December 31, 2019.

Capital Accumulation Plan.

The Gray Television, Inc. Capital Accumulation Plan (the “Capital Accumulation Plan”) is a defined contribution plan intended to meet the requirements of Section

401

(k) of the Internal Revenue Code. Employer contributions under the Capital Accumulation Plan include matching cash contributions at a rate of

100%

of the

first

of each employee’s salary deferral, and

50%

of the next

of each employee’s salary deferral. For the years ended

December 31, 2018,

2017

and

2016,

our matching contributions to our Capital Accumulation Plan were

$6.4

million,

$6.6

million and

$5.4

million, respectively. We estimate that our matching cash contributions to the Capital Accumulation Plan for year ending

December 31, 2019

will be approximately

$12.5

million.

In addition, the Company, at its discretion,

may

make an additional profit sharing contribution, based on annual Company performance, to those employees who meet certain criteria. For the years ended

December 31, 2018,

2017

and

2016,

the Company accrued contributions of

$4.3

million,

$4.1

million and

$3.4

million, respectively, as discretionary profit sharing contributions.

may

also make matching and discretionary contributions of our common stock under the Capital Accumulation Plan. As of

December 31, 2018,

we had

1,587,719

shares of common stock reserved for issuance under this plan.