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NACUBO has released Advisory Report 20-01, Fiduciary Activities and Defined Contribution Plans, interpreting the guidance issued by the Governmental Accounting Standards Board (GASB) in its Fiduciary Activities Implementation Guide related to reporting defined contribution plans as fiduciary activities. 

NACUBO’s advisory clarifies the questions and answers in the guide and recommends information that institutions should gather to assess GASB’s reponses. The most significant clarification in the advisory is that answers to guide questions vary depending on whether an institution’s defined contribution plan is a separate legal trust or an equivalent arrangement that does not have separate legal standing. Questions and answers that address trusts should not be applied to plans that are equivalent arrangements. The conclusion and analysis have been validated by GASB staff.

Public institutions should review their defined contribution plan documents and consult with legal counsel on plan structure. Institutions are encouraged to compile an inventory of their  defined contribution plans, including the following details:

  • The Internal Revenue Code section under which the plan is classified.
  • The legal structure of the plan: a trust, a trust-equivalent, included within the organization’s assets (not segregated), or other.
  • How the employee accounts are funded: by both the employer and employee, the employer only, or the employee only.
  • The companies providing the investment options and administrative services.
  • The public institution’s rights and responsibilities over the plan, indicating the level of control over the assets—in other words, whether the public institution can direct the use, exchange, or employment of the assets.

For defined contribution plans with unique fact patterns, the assets may have to be included in the statements of fiduciary funds of public institutions. Statements of fiduciary net position and changes in fiduciary net position will be included as a separate set of audited financial statements within the financial reports for FY20 under GASB Statement No. 84, Fiduciary Activities. NACUBO continues to discuss with GASB staff the ramifications of including defined contribution pension plans as fiduciary funds and will provide updates when possible.

Information contained in the guide is considered “Level B” Generally Accepted Accounting Principles (GAAP), in that it does not override the requirements in GASB statements. It can only be applied to the specific fact patterns contained within and is not to be analogized to broader concepts or principles. However, because GASB’s Implementation Guides are exposed and cleared by the Board, auditors carefully apply answers to institutions’ fact patterns. The guide is effective for reporting periods beginning after December 15, 2018 (FY20 for most public institutions).


Sue Menditto

Senior Director, Accounting Policy


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