14. Employee Benefit Plans

Supplemental Executive Retirement Plan

We maintain the United Therapeutics Corporation Supplemental Executive Retirement Plan (SERP) to provide retirement benefits to certain senior members of our management team.

Participants who retire at age 60 or older are eligible to receive either monthly payments or a lump sum payment based on an average of their total gross base salary over the last 36 months of active employment, subject to certain adjustments. Related benefit payments commence on the first day of the sixth month after retirement. Participants who elect to receive monthly payments will continue payments through the remainder of their life. Alternatively, participants who elect to receive a lump sum distribution will receive a payment equal to the present value of the estimated monthly payments that would have been received upon retirement. As of December 31, 2015 and 2014, all SERP participants had elected to receive a lump sum distribution. Participants who terminate employment for any reason other than death, disability, or change in control prior to age 60 will not be entitled to receive any benefits under the SERP.

We recognize the unfunded balance of the SERP as a liability on our consolidated balance sheets. Since we do not fund the SERP, the liability is equal to the projected benefit obligation as measured at the end of each fiscal year. Expenses related to the SERP are reported under the captions, "Research and development expense" and "Selling, general and administrative expense" in the accompanying consolidated statements of operations.

A reconciliation of the beginning and ending balances of the projected benefit obligation is presented below (in thousands):

	Year Ended December 31,
	2015			2014
Projected benefit obligation at the beginning of the year	$	57,955		$	51,034
Service cost		3,518			5,517
Interest cost		1,836			2,367
Plan amendments		—			3,862
Benefits paid		(7,117	)		—
Actuarial gain		(1,379	)		(4,825	)

Projected benefit obligation at the end of the year	$	54,813		$	57,955


Fair value of plan assets at the end of the year		—			—

Unfunded at end of the year(1)	$	54,813		$	57,955


(1)	At December 31, 2015, the aggregate balance of the SERP liability was $54.8 million, of which $14.7 million, representing the benefit obligation due for participants who are currently eligible to retire, has been classified as current liabilities under the caption "Other current liabilities" on our consolidated balance sheets.

The accumulated benefit obligation, a measure that does not consider future increases in participants' salaries, was $42.3 million and $43.5 million at December 31, 2015 and 2014, respectively.

Future estimated benefit payments, based on current assumptions, including election of lump-sum distributions and expected future service, are as follows (in thousands):

Year Ended December 31,
2016	$	14,651
2017		—
2018		—
2019		4,580
2020		—
2021 - 2025		51,836

Total	$	71,067

The following weighted-average assumptions were used to measure the SERP obligation:

	Year Ended December 31,
	2015			2014
Discount Rate		3.82	%		3.64	%


Salary Increases		4.00	%		5.00	%

The components of net periodic pension cost recognized on our consolidated statement of operations consist of the following (in thousands):

	Year Ended December 31,
	2015		2014		2013
Service cost	$	3,518	$	5,517	$	5,406
Interest cost		1,836		2,367		1,584
Amortization of prior service cost		1,234		1,234		827
Amortization of net actuarial loss		160		210		794

Total	$	6,748	$	9,328	$	8,611

Reclassification adjustments related to the SERP from accumulated other comprehensive loss to the statement of operations by line item and the tax impact of these reclassifications is presented below (in thousands):

Components Reclassified from Accumulated Other Comprehensive Loss(1)	As of December 31, 2015			As of December 31, 2014
Prior service cost:
Research and development	$	408		$	408
Selling, general and administrative		826			826

Total		1,234			1,234
Amortization of net actuarial loss:
Research and development		—			69
Selling, general and administrative		160			141

Total		160			210
Total prior service cost and amortization of net actuarial loss		1,394			1,444
Tax benefit		(517	)		(540	)

Total, net of tax	$	877		$	904


(1)	Refer to Note 12—Accumulated Other Comprehensive Loss.

Amounts relating to the SERP that have been recognized in other comprehensive gain (loss) are as follows (in thousands):

	Year Ended December 31,
	2015			2014			2013
Net unrecognized actuarial gain	$	1,539		$	5,035		$	3,956
Net unrecognized prior service cost (benefit)		1,234			(2,627	)		827

Total		2,773			2,408			4,783
Tax benefit		(1,070	)		(920	)		(1,688	)

Total, net of tax	$	1,703		$	1,488		$	3,095

The table below presents amounts relating to the SERP included in accumulated other comprehensive loss that have not yet been recognized as a component of net periodic pension cost on our consolidated statements of operations (in thousands):

	Year Ended December 31,
	2015			2014			2013
Net unrecognized actuarial loss	$	1,228		$	2,767		$	7,803
Net unrecognized prior service cost		7,093			8,326			5,698

Total		8,321			11,093			13,501
Tax benefit		(3,067	)		(4,150	)		(5,074	)

Total, net of tax	$	5,254		$	6,943		$	8,427

Estimated amounts included in accumulated other comprehensive loss as of December 31, 2015 that are expected to be recognized as components of net periodic pension expense on our statement of operations for the year ended December 31, 2016 comprise the following (in thousands):

Amortization of prior service cost	$	1,234
Amortization of net actuarial loss		—

Total	$	1,234

Employee Retirement Plan

We maintain a Section 401(k) Salary Reduction Plan which is open to all eligible full-time employees. Under the 401(k) Plan, eligible employees can make pre-tax contributions up to statutory limits. Currently, we make discretionary matching contributions to the 401(k) Plan equal to 40 percent of a participant's elected salary deferral. Matching contributions vest immediately for participants who have been employed for three years; otherwise, matching contributions vest annually, in one-third increments over a three-year period until the three-year employment requirement has been met.