FASB addresses employee benefit plans and master trusts

FASB has proposed changes to how financial statements must describe an employee benefit plan’s interest in a master trust.

The issuance is titled Proposed Accounting Standards Update, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Master Trust Reporting.

A master trust holds assets of more than one plan sponsored by a single employer—or a group of employers under common control. A regulated financial institution serves as trustee or custodian of the master trust.

Most financial statement preparers rely on the AICPA Audit and Accounting Guide Employee Benefit Plans to develop master trust disclosures in plan financial statements, according to FASB’s exposure draft. FASB’s proposal is designed to create more comprehensive master trust disclosure requirements in U.S. GAAP.

The proposed amendments are meant to clarify presentation requirements for a plan’s interest in a master trust while requiring more detailed disclosures of the plan’s interest in the master trust. In addition, the proposal is designed to eliminate a redundancy relating to Sec. 401(h) disclosure requirements.

The proposal represents a consensus of FASB’s Emerging Issues Task Force. Comments were to be accepted through Sept. 26 at FASB’s website.