Employee Benefit Plans

Defined Contribution Plan

Effective July 2002, the Company established a voluntary savings and defined contribution plan (the “Plan”) under Section 401(k) of the Internal Revenue Code. This Plan covers all U.S. employees meeting certain eligibility requirements and allows participants to contribute a portion of their annual compensation. Employees are 100% vested in their own contributions. For the years ended December 31, 2016 and 2015, the Company did not make any contributions to the Plan.

Effective July 1, 2007, the Company, in accordance with the labor pension system in Taiwan, contributes 6% of salaries to individual pension accounts managed by the Bureau of Labor Insurance. The plan covers all Taiwan employees that elect the new pension system and all employees hired after July 1, 2005. For the years ended December 31, 2016 and 2015, the Company contributed approximately $35,000 and $77,000, respectively.

Defined Benefit Plan

The Company has a defined benefit plan covering employees in Taiwan. The Company accounts for its defined benefit plan in accordance with the authoritative guidance issued by the FASB on retirement benefits, which requires the Company to recognize the funded status of its defined benefit plan in the accompanying consolidated balance sheet, with the corresponding adjustment to accumulated other comprehensive income, net of tax.

At December 31, 2016 and 2015, $28,675 and $27,186, respectively, is included in accumulated other comprehensive (loss) income for amounts that have not yet been recognized in net periodic pension cost. These amounts include the following: unrecognized transition obligation of $10,620 and $15,615 at December 31, 2016 and 2015, respectively, and unrecognized actuarial gains of $39,295 and $42,800 at December 31, 2016 and 2015, respectively. During 2016, the total amount recorded in other comprehensive (loss) income related to the pension plan was $1,489 (net of tax), which consisted of an actuarial loss of ($3,830) and the recognition of $5,319 of transition obligations recognized during 2016 as a component of net periodic pension cost. The transition obligation and actuarial gain included in accumulated other comprehensive (loss) income and expected to be recognized in net periodic pension cost for the year ended December 31, 2017, is $5,319 and $1,188 respectively.

Pension information for the years ended December 31, 2016 and 2015, is as follows:



	2016		2015
Accumulated benefit obligation	$	190,186	$	149,932
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	194,098		193,144
Interest cost	3,471		4,348
Actuarial loss	1,702		2,549
Benefits paid	—		—
Service cost	—		1,240
Currency translation	3,897		(7,183		)
Projected benefit obligation at end of year	$	203,168	$	194,098
Changes in plan assets:
Fair value of plan assets at beginning of year	$	126,334	$	120,018
Actual return on plan assets	1,180		3,129
Benefits paid	—		—
Employer contributions	6,860		7,864
Currency translation	2,528		(4,677		)
Fair value of plan assets at end of year	$	136,902	$	126,334
Funded status	$	66,266	$	67,764



Components of net periodic pension cost:
Interest cost	$	3,471		$	4,348
Expected return on plan assets	(2,260		)	(2,702		)
Amortization of net loss	3,725			3,684
Service cost	—			1,240
Net periodic pension cost	$	4,936		$	6,570

The Company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. Company contributions of approximately $7,000 are expected to be made during 2017. Benefit payments of approximately $221,000 are expected to be paid in 2017 through 2026.

The Company utilized the following assumptions in computing the benefit obligation at December 31, 2016 and 2015 as follows:



	Years ended December 31,
	2016		2015
Discount rate	1.50	%	1.75	%
Rate of increase in compensation levels	1.00	%	2.00	%
Expected long-term rate of return on plan assets	1.50	%	1.75	%