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, 2018 and 2017, 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, 2018 and 2017, the Company contributed approximately $5,000 and $39,000, 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, 2018 and 2017, $26,802 and $22,096, 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 $0 and $5,778 at December 31, 2018 and 2017, respectively, and unrecognized actuarial gains of $26,802 and $33,545 at December 31, 2018 and 2017, respectively. During 2018, the total amount recorded in other comprehensive (loss) income related to the pension plan was $4,706 (net of tax), which consisted of an actuarial loss of $983 and the recognition of $5,689 of transition obligations recognized during 2018 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, 2019, is $5,689 and $594 respectively.

Pension information for the years ended December 31, 2018 and 2017, is as follows:



	2018			2017
Accumulated benefit obligation	$	165,031		$	222,113
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	231,618			203,168
Interest cost	2,509			3,242
Actuarial loss	10,248			7,050
Benefits paid	(64,016		)	—
Service cost	—			—
Currency translation	(6,098		)	18,158
Projected benefit obligation at end of year	$	174,261		$	231,618
Changes in plan assets:
Fair value of plan assets at beginning of year	$	190,950		$	136,902
Actual return on plan assets	7,161			1,486
Benefits paid	(64,016		)	—
Employer contributions	5,148			39,547
Currency translation	(4,892		)	13,015
Fair value of plan assets at end of year	$	134,351		$	190,950
Funded status	$	(39,910	)	$	(40,668	)



Components of net periodic pension cost:
Interest cost	$	2,509		$	3,242
Expected return on plan assets	(2,068		)	(2,185		)
Amortization of net loss	5,008			4,387
Service cost	—			—
Net periodic pension cost	$	5,449		$	5,444

The Company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. Company contributions of approximately $5,000 are expected to be made during 2019. Benefit payments of $177,000 are expected to be paid through 2028.

The Company utilized the following assumptions in computing the benefit obligation at December 31, 2018 and 2017 as follows:



	Years ended December 31,
	2018		2017
Discount rate	0.85	%	1.10	%
Rate of increase in compensation levels	1.00	%	1.00	%
Expected long-term rate of return on plan assets	0.85	%	1.10	%