Proposed Rule May Put Many Firms in Red

NEW YORK — The Financial Accounting Standards Board proposed rules Thursday that would force U.S. companies to deduct billions of dollars in profits to account for medical and insurance benefits to retired employees.

The proposal, scheduled to take effect in 1992, could wipe out the earnings of many companies, prompting some to reduce or discontinue promised benefits, analysts said.

Present accounting rules do not obligate companies to report estimated retiree benefit expenses or to reserve money for them. They must report such expenses only as they are paid.

Strong Effect

But the proposal--which has been in the works for a decade--would require companies to deduct from their earnings enough money for a special reserve that would cover the estimated benefit expenses.

“The proposal would devastate the balance sheets and income statements of U.S. companies,” said Lee Seidler, an accounting specialist and senior managing director of Bear, Stearns & Co.

FASB, a government-sanctioned authority for setting accounting standards, acknowledges that retirement benefits are the biggest liability for some companies, yet they are not currently recognized in most financial statements.