FASB proposes beefing up employee benefit plan master trust disclosures

By Ken Tysiac

FASB is proposing new accounting rules that are designed to provide financial statement users better information about an employee benefit plan's interest in a master trust.

The board on Thursday issued 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. The proposal is a consensus of FASB's Emerging Issues Task Force.

A master trust is a trust that 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 designed 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.

Comments can be made by Sept. 26 at FASB's website.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

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