Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

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, 2020 and 2019, 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, 2020 and 2019, the Company contributed approximately $2,000 and $4,000, 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, 2020 and 2019, $7,719 and $33,566, 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 $0 at December 31, 2020 and 2019, respectively, and unrecognized actuarial gains of $9,872 and $33,566 at December 31, 2020 and 2019, respectively. During 2020, the total amount recorded in other comprehensive (loss) income related to the pension plan was $(25,847) (net of tax), which consisted of an actuarial loss of $25,847 and the recognition of $0 of transition obligations recognized during 2020 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, 2021, is $0 and $18 respectively.

Pension information for the years ended December 31, 2020 and 2019, is as follows:


	2020		2019
Accumulated benefit obligation	$	65,188	$	170,879
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	180,151		174,261
Interest cost	1,207		1,469
Actuarial gain	28,834		389
Benefits paid	(121,838)		—
Service cost	—		—
Currency translation	7,157		4,032
Projected benefit obligation at end of year	$	95,511	$	180,151
Changes in plan assets:
Fair value of plan assets at beginning of year	$	149,903	$	134,351
Actual return on plan assets	6,226		8,069
Benefits paid	(121,838)		—
Employer contributions	2,012		4,041
Currency translation	4,173		3,442
Fair value of plan assets at end of year	$	40,476	$	149,903
Funded status	(55,035)		(30,248)

The underfunded status of the Company's defined benefit plan has been recorded as a component of other long-term liabilities as of December 31, 2020 and 2019.


Components of net periodic pension cost:
Interest cost	$	1,207	$	1,469
Expected return on plan assets	(1,005)		(1,133)
Amortization of net (gain) loss	(1,052)		(581)
Service cost	—		—
Net periodic pension (benefit) cost	$	(850)	$	(245)

The Company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. Company contributions of approximately $2,000 are expected to be made during 2021. Benefit payments of $78,000 are expected to be paid through 2030.

The Company utilized the following assumptions in computing the benefit obligation at December 31, 2020 and 2019 as follows:


	Years ended December 31,
	2020		2019
Discount rate	0.43	%	0.66	%
Rate of increase in compensation levels	2.50	%	1.00	%
Expected long-term rate of return on plan assets	0.43	%	0.66	%