put, or delay, in payment. The fund’s units are issued and redeemed daily at the constant NAV of $1 per unit. The fund’s investment objective is to preserve principal and achieve high current income through a diversified portfolio of high-quality investment contracts.
Transfers between level categorizations may occur due to changes in the availability of market observable inputs. Transfers in and out of level categorizations are reported as having occurred at the beginning of the year in which the transfer occurred. There were no movements between levels in 2022 and 2021. The Plan has no Level 2 or Level 3 investments. The following table provides, by level within the fair value hierarchy, a summary of investments of the Plan measured at fair value on a recurring basis as of December 31:
| | | | | | |
| | 2022 | | 2021 |
Quoted prices in active markets (level 1): | | | | | | |
Mutual funds | | $ | 5,952,101 | | $ | 7,133,728 |
William Penn Bancorporation common stock | | | 1,833,342 | | | 1,618,664 |
Interest bearing cash | | | 1,008 | | | 1,000 |
| | | 7,786,451 | | | 8,753,392 |
Measured at net asset value (a): | | | | | | |
Collective investment trusts | | | 880,883 | | | 580,122 |
Total investments, at fair value | | $ | 8,667,334 | | $ | 9,333,514 |
| | | | | | |
| (a) | In accordance with Subtopic 820-10 of the FASB Accounting Standards Codification, certain investments that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the Statements of Net Assets Available for Benefits. | |
Note 5: Income Tax Status
The plan obtained its latest determination letter on June 30, 2020, in which the IRS stated that the Plan, as then designed, was in compliance with the applicable requirements of the IRC. The Plan is required to operate in conformity with the IRC to maintain its tax-exempt qualification. The Plan administrator believes the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC and therefore believes that the Plan is qualified and the related trust is tax-exempt.
Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has concluded that as of December 31, 2022 and 2021, there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by the IRS and the United States Department of Labor, however there are currently no audits for any tax periods in progress. The Plan administrator believes that as of the date of this report it is no longer subject to income tax examinations for the years prior to 2019.
Note 6: Party-In-Interest and Related Party Transactions
As of December 31, 2022 and 2021, the Plan held 151,265 and 133,995 shares, respectively, of the Company’s common stock. In addition, certain receivables are loans to employees of the Company, and therefore are considered party-in-interest transactions.
The Company absorbs some costs incurred in relation to the administration of the Plan. Such costs include legal, record keeping, administrative, and accounting fees. These costs amounted to $62,437 and $37,853 for the years ended December 31, 2022 and 2021, respectively.
Note 7: Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are subject to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
As of December 31, 2022, the Plan had investments of $1,833,342 in William Penn Bancorporation common stock, $1,128,214 in Fidelity Freedom 2040 Fund - Class K6, $1,022,657 in Fidelity Freedom 2035 Fund - Class K6, $950,628 in Fidelity Freedom 2025 Fund - Class K6, and $880,883 in Putnam Stable Value Fund representing more than 10 percent of total assets available for plan benefits. As of December 31, 2021, the Plan had investments of $1,618,664 in William Penn Bancorporation common stock, $1,189,484 in Fidelity Freedom 2040 Fund - Class K6, $1,180,553 in Fidelity Freedom 2035 Fund - Class K6, and $1,122,389 in Fidelity Freedom 2025 Fund - Class K6 representing more than 10 percent of total assets available for plan benefits.