Rules to Give Clarity on Benefit Plans Run by Master Trusts

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By Steve Burkholder

Users of financial statements—including federal labor and tax officials—should have better information on the health of employee benefits plans guided by bank-run master trusts, under accounting rules issued by the Financial Accounting Standards Board.

Many employee benefit plans hold investments in master trusts, according to the new standard issued Feb. 27—Accounting Standards Update 2017-06; ASC 960, ASC 962 and ASC 965.

FASB aims for employee plans to clarify better what investment holdings are contained in the plans run by the trusts. FASB also wants to make the accounting easier.

Master Trust Defined

According to the new rules, a master trust is a trust for which a regulated bank, trust company or similar regulated financial institution:

  •  “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.”
The U.S. Department of Labor, the Internal Revenue Service, the Pension Benefit Guaranty Corporation, and plan sponsors and participants study the financial statements of the benefit plans that are the focus of FASB’s rulemaking.

Net Basis, Single Line Item

The standard calls for a plan that holds investments in a master trust to present balances and activity of the master trust on a net basis and in a single line item.

The board also enhanced footnote disclosures on the affected plans.

The rules, which are effective for fiscal years starting after Dec. 15, 2018, reflect a marketplace shift from defined benefit plans to defined contribution plans.

To contact the reporter on this story: Steve Burkholder in Norwalk, Conn. at sburkholder@bna.com

To contact the editor responsible for this story: S. Ali Sartipzadeh at asartipzadeh@bna.com

For More Information

The new FASB standard is available at http://src.bna.com/mxu

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