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, 2017 and 2016, 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, 2017 and 2016, the Company contributed approximately $39,000 and $35,000, 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, 2017 and 2016, $22,096 and $28,675, 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 $5,778 and $10,620 at December 31, 2017 and 2016, respectively, and unrecognized actuarial gains of $33,545 and $39,295 at December 31, 2017 and 2016, respectively. During 2017, the total amount recorded in other comprehensive (loss) income related to the pension plan was $(6,578) (net of tax), which consisted of an actuarial loss of ($12,227) and the recognition of $5,649 of transition obligations recognized during 2017 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, 2018, is $5,649 and $677 respectively.

Pension information for the years ended December 31, 2017 and 2016, is as follows:



	2017		2016
Accumulated benefit obligation	$	222,113	$	190,186
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	203,168		194,098
Interest cost	3,242		3,471
Actuarial loss	7,050		1,702
Benefits paid	—		—
Service cost	—		—
Currency translation	18,158		3,897
Projected benefit obligation at end of year	$	231,618	$	203,168
Changes in plan assets:
Fair value of plan assets at beginning of year	$	136,902	$	126,334
Actual return on plan assets	1,486		1,180
Benefits paid	—		—
Employer contributions	39,547		6,860
Currency translation	13,015		2,528
Fair value of plan assets at end of year	$	190,950	$	136,902
Funded status	$	40,668	$	66,266



Components of net periodic pension cost:
Interest cost	$	3,242	$	3,471
Expected return on plan assets	2,185		(2,260		)
Amortization of net loss	4,387		3,725
Service cost	—		—
Net periodic pension cost	$	9,814	$	4,936

The Company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. Company contributions of approximately $40,000 are expected to be made during 2018. No benefit payments are expected to be paid in 2018 through 2026.

The Company utilized the following assumptions in computing the benefit obligation at December 31, 2017 and 2016 as follows:



	Years ended December 31,
	2017		2016
Discount rate	1.10	%	1.50	%
Rate of increase in compensation levels	1.00	%	1.00	%
Expected long-term rate of return on plan assets	1.10	%	1.50	%