FASB updated accounting rules for how employee benefit plans report their interest in a master trust.
The new guidance is contained in Accounting Standards Update No. 2017-06, 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.
In a master trust, a regulated financial institution serves as a trustee or custodian, holding assets of more than one plan sponsored by a single employer or sponsored by a group of employers under common control.
FASB concluded that stakeholders consider the current master trust disclosure requirements in GAAP to be limited and incomplete, particularly related to disclosures of the plan's interest in the master trust.
The new standard will require all plans to disclose the dollar amount of their interest in each general type of investment. This will supplement the existing requirement to disclose the master trust's balances in each general type of investment.
The amendments also will require all plans to disclose their master trust's other asset and liability balances, which include, among other items, amounts due from brokers for securities sold, amounts due to brokers for securities purchased, accrued interest and dividends, and accrued expenses. Plans also will be required to disclose the dollar amount of the plan's interest in each of those other asset and liability balances.
In addition, the amendments will require health and welfare benefit plans to disclose the name of the defined benefit pension plan in which investment disclosures relating to 401(h) account assets are provided.
The update takes effect for fiscal years beginning after Dec. 15, 2018. Early adoption is permitted, and an entity should apply the amendments in the update retrospectively to each period for which financial statements are presented.