RISKS AND UNCERTAINTIES
The Plan, through the Master Trust, holds various
investment securities. Investment securities are exposed to various
risks such as interest rate, market, and credit risks. Due to the
level of risk associated with certain investment securities, it is
at least reasonably possible that changes in the values of
investment securities will occur in the near term and that such
changes could materially affect participants’ account balances and
the amounts reported in the Statement of Net Assets Available for
The Plan, through the Master Trust, invests in
Class B shares of Berkshire Hathaway within the Berkshire
Hathaway Class B stock fund. The following activity is
presented at the Master Trust level: during the years ended
December 31, 2020 and 2019, 64,603 and 27,765 Class B shares,
respectively, of Berkshire Hathaway at a cost of $12,604,948 and
$5,604,251 respectively, were purchased within the fund. All
purchased shares were acquired at the then current market value on
the open market. In addition, during the years ended December 31,
2020 and 2019, the fund sold or distributed to participants 94,317
and 97,870 Class B shares, respectively, of Berkshire Hathaway
and received proceeds of $19,329,580 and $20,377,139, respectively.
The realized gains on these sales were $4,169,251 and $5,206,235
for 2020 and 2019, respectively.
The Plan obtained its latest determination letter
dated September 28, 2017, in which the Internal Revenue
Service stated that the Plan, as then designed, was in compliance
with the applicable requirements of Section 401 of the
Internal Revenue Code. The Plan has been amended since receiving
this determination letter. However, the Company believes that the
Plan currently is designed and is being operated in compliance with
the applicable requirements of the Internal Revenue Code.
Therefore, no provision for income taxes has been included in the
Plan’s financial statements.
The Plan administrator has analyzed the tax
positions taken by the Plan and has concluded that, as of
December 31, 2020, there are no uncertain positions taken or
expected to be taken that would require such recognition or
disclosure in the financial statements.
The Plan was adopted with the expectation that it
will continue indefinitely. The Company may, however, terminate the
Plan at any time. In addition, the management of any subsidiary may
withdraw such subsidiary from the Plan at any time. In the event of
termination of the Plan, all participants immediately will become
fully vested in the value of their account balances.
Physical and economic conditions worldwide have
been impacted by the COVID-19 pandemic. There are
uncertainties surrounding COVID-19’s impact on the economy as a
whole, on businesses, and on the investment market. There is also
uncertainty regarding the positive impact of any federal government
relief efforts through the date of this report. Accordingly, the
impact of the global pandemic on the current and future operations
of the Company or Plan is unknown.
All investments of the Plan are held by Voya
Institutional Trust Company in participant-directed investment
funds and the Plan’s recordkeeper is Voya Institutional Plan
Services. All investments were transferred in-kind to Great-West Trust Company,
LLC and Empower Retirement, LLC who became the new trustee and
recordkeeper, respectively, effective January 4, 2021.