|AECOM filed this Form 11-K on 06/14/2018|
defined in the Plan document, whichever occurs first. These unvested forfeited Company contributions are accumulated in the forfeiture account and are available to reduce subsequent Company contributions or pay Plan expenses. The balance in the forfeiture account was approximately $0.6 million and $2.3 million at December 31, 2017 and 2016, respectively. Forfeitures of $2.3 million were used to make corrective contributions to the Plan in accordance with the Internal Revenue Services Employee Plans Compliance Resolution Systems Self-Correction Program, during the year ended December 31, 2017. The amount used to reduce Plan expenses was not significant.
Investment Options Upon enrollment in the Plan, a participant is allowed to direct the investment of his or her account into a variety of diversified investment funds allowed by the Plan. If a participant is automatically enrolled in the Plan and has not selected an investment to invest his or her contributions to the Plan, those contributions are invested in a target date fund, as determined by the Company. Participants may change their selection of investments at any time.
One of the investment options offered under the Plan consists of common shares of AECOM, which, as of July 1, 2016, was converted to an employee stock ownership plan as defined in Section 4975(e)(7) of the Code within the Plan.
Notes Receivable from Participants Active participants may obtain loans from their vested account balances provided they meet the Plans eligibility requirements. The minimum loan amount permitted is $1,000; the maximum is the lesser of $50,000 or 50% of the participants vested account balance. The interest rates are no less than 1% over the prime rate as published in The Wall Street Journal, in effect on the first business day of each month in which the loan application is made. Notes receivable from participants bear interest at rates that range from 4.25% to 9.25% at December 31, 2017 and 4.25% to 9.50% at December 31, 2016. The repayment period of such loans cannot exceed five years, unless the proceeds are used to buy the participants principal residence, in which case longer terms, up to 20 years, are allowed. These loans are secured by a promissory note from the participant and his or her vested interest in the Plan.
Distributions Generally, distributions are made upon a participants election after a participant terminates employment, becomes disabled, dies, or turns age 59-1/2 (in the event of death, payment shall be made to his or her beneficiary or, if none, to his or her legal representatives). A partial or complete distribution may be made in a single lump-sum in the form of cash or in-kind distribution (in case of Company shares). Distributions may also be made in monthly, quarterly, semi-annual, or annual installments, or in a direct rollover distribution. Distribution options for members of certain acquired companies, provided in previously merged plans, were grandfathered in as a protected benefit. Certified hardship withdrawals are permitted on vested amounts for certain substantiated financial reasons. If the participant takes a hardship withdrawal, the participant will be suspended from making further contributions to the Plan for a six-month period.
Transfers in from Affiliated Plan On January 1, 2017, net assets of approximately $1.2 million, which consisted of approximately $1.1 million in investments and $0.1 million in notes receivable from participants, were transferred into the Plan from an affiliated plan of the Company.
B. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plans management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Investment Valuation and Income Recognition Investments held by the Plan are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The cost of investments sold or distributed is determined on the basis of average cost for each participant. Purchases and sales of securities are reflected on the trade date. Transactions pending clearing with brokers not settled at year-end are recorded as other receivables or payables on the Statements of Net Assets Available for Benefits. Dividends are recorded on the ex-dividend date. Interest income is recorded as earned. Net appreciation or depreciation in fair value of investments includes the Plans gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants Notes receivable from participants are measured at their principal balance plus any accrued interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2017 or 2016. If a participant ceases to make loan repayments and the Plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.