FASB Improves Master Trust Disclosures in Employee Benefit Plans

March 23, 2017

Employee benefits

The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU) that updates the GAAP presentation and disclosure requirements relating to master trusts of employee benefit plans.

The guidance, issued on February 27, is contained in ASU 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 (A Consensus of the Emerging Issues Task Force).

The FASB ASU will eliminate possible misleading disclosures when a plan has a divided interest in the individual investments of the master trust, and should result in more complete and useful information about a plan’s investment in a master trust, according to Ian MacKay, CPA, CGMA, director of the AICPA’s Employee Benefit Plan Audit Quality Center (EBPAQC).

MacKay said the ASU is the result of the efforts of the AICPA Employee Benefit Plan Expert Panel and EBPAQC’s Executive Committee to bring to FASB's attention the need for employee benefit plan reporting simplification.  He pointed to a 2013 Discussion Memorandum which provided FASB with observations regarding areas in current plan accounting that do not consider the specialized characteristics of employee benefit plans and where there are challenges in practice.