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Why Choose a Retiree Medical Trust (RMT)

GASB Accounting Benefits

GASB Accounting Benefits

The implementation of GASB 43/45 has become one more factor to consider when deciding how to provide retiree health care benefits in a cost efficient manner. RMTs can be used to help meet the challenges of complying with these new accounting rules.

Funding efficiency is maximized by discontinuing pay-as-you-go financing and, instead, using a trust structure such as an RMT. If assets are put aside in a trust, GASB allows the use of a more favorable discount rate for purposes of calculating costs and liabilities under GASB 43/45.

It is also possible to set up a cost-sharing trust, in which multiple jurisdictions participate in a combined trust with the same per capita contribution and same benefit provisions. In this case, some of the GASB reporting responsibility is shifted from the individual jurisdictions to the trust itself.

The jurisdictions need only report the amount of their annual contribution, rather than the schedule of funding progress and liabilities. The trust issues its own GASB 43 report, which contains the schedule of funding status.