In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-06. The new standard clarifies the presentation requirement for master trust and requires more detailed disclosures of the Plan’s interest in the master trust. The update is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted and is adopted retrospectively to each period the financial statements are presented.
The new standard includes the following amendments:
- Requires a plan’s interest and changes in that interest are shown on the face of the financial statements. The interest should be shown as a single line item for each interest in a master trust that the plan holds.
- Removes the requirement to disclose the percentage interest in the master trust for plans with divided interests. The standard instead requires that all plans disclose the dollar amount of their interest in each of the general types of investments.
- Requires plans to disclose the master trust’s other assets and liabilities and the dollar amount of the plan’s interest in those items.
- Removes the investment disclosures that were required for 401(h) account assets provided in the health and welfare benefit plan’s financial statements. These plans should disclose the name of the defined benefit plan in which the investment disclosures are provided.
The guidance improves financial reporting and clarifies the required disclosures for master trust. Contact us if you have any questions regarding this or anything else related to Employee Benefit Plans.