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Master Trust vs. Comingled Trust

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3 replies to this topic

#1 TRA-C-C


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Posted 27 July 2001 - 10:27 AM

I need help defining a Master Trust versus a comingled Trust. I have a few clients that invest their PS and MP Plan assets jointly. To date we have allocated the investment performance and underlying assets between the two plans on a consistent and reasonable basis for purposes of participant allocations and Form 5500 reporting. Recently an auditor (CPA, not IRS or DOL) asserted that these are Master Trusts that must file MTIA 5500s. In none of our situations are the Trust documents written as Master Trusts, but they do allow for the comingling of investments. While the investments may be placed with brokerage firms or mutual funds, the brokers or mutual fund families are not acting as Trustee or Custodian for the plans. The Plans are Trusteed by the shareholders. What insight can anyone out there offer?

#2 Erik Read

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Posted 03 August 2001 - 01:57 PM

My understanding of a master trust is that it's sponsored by a custodian, not a specific plan. A master trust is established to hold the assets of several account holders. Not sure I'd believe the auditor - I'd get a second opinion - unless someone else can help shed some light on the subject.

Also - commingled funds for pension and profit sharing plans, are not the same as "commingled trusts" those are an type of trust as well, that require a seperate trust document to be adopted by the plan in order to invest in them.

Hope that helps.
Erik Read, APR CKC

#3 Medusa


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Posted 03 August 2001 - 03:57 PM

To my knowledge, the definition of a master trust is "a trust holding assets of the plans of one employer or a group of employers under common control." I do not think that it anywhere has to actually be referred to as a master trust, in order to be one.

We have more than one situation where the employer sponsors 2 defined contribution plans. They share a trust as specified in the document, although nowhere is the term "master trust" used. We are treating these as master trusts. In fact, it has been helpful, because we cannot split up the reportable transactions by plan. The arrangements are with a bundled provider who has established separate "sources" for each plan, but the schedule of reportable transactions is not split up by source. Filing a 5500 for the MTIA solved our problems in this area.

#4 Jeff V

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Posted 11 August 2001 - 04:54 PM

Just a guess here... maybe the difference is that a Master Trust is provided for by a separate Master Trust document, while collective/commingled trusts are referenced in each individual trust document.