United States

Proposed disclosures of a plan's interest in a master trust


A master trust is a trust for which a regulated financial institution (bank, trust company, or similar financial institution that is regulated, supervised and subject to periodic examination by a state or federal agency) serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. Many users of employee benefit plan financial statements find the disclosures of a plan’s interest in a master trust to be limited and incomplete. To address this issue, the Financial Accounting Standards Board recent issued a proposed Accounting Standards Update (ASU), Plan Accounting – Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force).

If finalized, the proposed ASU would require a plan’s interest in a master trust and any change in interest in the master trust to be presented in single line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively, to be consistent with the requirements of Topic 960. All plans that hold an interest in a master trust would be required to disclose (a) their master trust’s other asset and liability balances and (b) the dollar amount of the plan’s interest in each of those balances. All plans with a divided interest would be required to disclose both a list of the general types of investments held by the master trust and the dollar amount of their interest in each of those general types of investments.

The proposed ASU would no longer require a health and welfare benefit plan’s financial statements to provide investment disclosures relating to 401(h) account assets, but would require the health and welfare benefit plan to disclose the name of the defined benefit pension plan in which those investment disclosures are provided.

The proposed ASU is available for comment until September 26, 2016.