EITF Issue No. 16-B: Employee Benefit Plan Master Trust Reporting
Last updated on March 1, 2017. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
Project Objective and BackgroundThe primary objective of employee benefit plan financial reporting is to provide financial information that is useful in assessing a plan’s present and future ability to pay benefits as they become due.
Many plans hold investments in master trusts. 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. A bank or trust company ordinarily serves as the trustee for a master trust, acts as custodian, and may or may not have discretionary control over the assets. Each plan has an interest in the net assets of the master trust. Plan interests in master trusts may be divided interests, undivided interests, or a combination thereof.
A plan has an undivided interest in a master trust when the plan holds a proportionate interest in the net assets of the master trust, but has no specific ownership interest in any of the individual investments of the master trust.
A plan has a divided interest (or a specific interest) in a master trust when the plan has a specific ownership interest in individual investments of the master trust. All interest, dividends, other income, expenses, and any proceeds from the sale or disposition of the investments of a master trust in which a plan has a divided interest are allocable to the plan that holds the divided interest. The trustee of a master trust may segregate a portion of the master trust to hold investments in which a plan has a divided interest by establishing one or more separate investment accounts to hold such investments.
Historically, most benefit plans were defined benefit plans in which the sponsor promised to pay a specific benefit that was determined by specific factors (age, years of service, compensation, and so forth). Under those defined benefit plans, the investments were typically directed by the sponsor (and otherwise known as nonparticipant-directed investments). When a master trust was used to hold those investments, the plans typically held an undivided interest in that master trust. However, employee benefit plans have evolved over time. The vast majority of plans are now defined contribution plans that involve more participant-directed investments (that is, the participant can elect specific investments based on options that the plan provides). Today, it is more common for plans to have divided interests in master trusts.
Some stakeholders believe that the evolution of employee benefit plans has resulted in a need to update some of the GAAP presentation and disclosure requirements relating to master trusts.
- Download the Accounting Standards Update.
Decisions Reached at Last Meeting (November 30, 2016)On November 30, 2016, the Board ratified the following consensuses reached at the November 17, 2016 EITF meeting. The Board directed the staff to draft an Accounting Standards Update reflecting the consensus for vote by written ballot.
- All plans should present their interest in the master trust and change in interest in the master trust as single line items in the statement of net assets available for benefits and the statement of changes in net assets available for benefits.
- All plans should provide the dollar amount of the plan’s interest in each general type of investment held by the master trust, which would supplement the existing GAAP requirement for a plan to disclose the master trust’s balances in each of those investments, by general type.
- All plans should disclose the master trust’s other assets and liabilities, as well as the dollar amount of the plan’s interest in each of those assets and liabilities.
- To remove the current GAAP requirement to disclose, for plans with a divided interest in a master trust, the plan’s overall percentage in the master trust, in order to avoid requiring redundant information.
- A health and welfare plan is not required to provide investment disclosures for 401(h) account assets because those disclosures are required to be provided within the defined benefit pension plan financial statements. However, the Task Force decided to require the disclosure of the defined pension plan name within the health and welfare benefit plan so that all users can access the investment disclosure information relating to the 401(h) accounts, if desired.
- The amendments in the Accounting Standards Update should be effective for fiscal years beginning after December 15, 2018, with early adoption permitted.
- An entity should apply the amendments in the Accounting Standards Update retrospectively to all periods presented beginning in a reporting entity’s fiscal year of adoption, in order to allow for greater comparability.
EITF/Board Meeting DatesThe EITF and Board meeting minutes are provided for the information and convenience of constituents who want to follow the EITF’s and Boards' deliberations. All of the conclusions reported are tentative and may be changed at future EITF or Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|November 30, 2016
|EITF Ratification Minutes|
|November 17, 2016
|EITF Meeting Minutes
Issue Summary No. 1, Supplement No. 1
|June 29, 2016
|EITF Ratification Minutes|
|June 10, 2016
|EITF Meeting Minutes
Issue Summary No. 1
|May 12, 2016
EITF Educational Session
|EITF Educational Session Slides|
|April 20, 2016
|Agenda Prioritization Meeting Minutes|
Contact InformationRob Moynihan
Assistant Project Manager
Supervising Project Manager
Postgraduate Technical Assistant