v3.26.1
Investments in Master Trust
 12 Months Ended
Dec. 31, 2025
EBP 002 [Member]  
EBP, Master Trust [Line Items]  
Investments in Master Trust

3. Investments in Master Trust

The Master Trust includes assets of the Plan and the Packaging Corporation of America Thrift Plan for Hourly Employees. All of the Plan’s investments are invested in the Master Trust. The purpose of the Master Trust is the collective investment of assets of

participating plans. Each participating plan’s interest in the Master Trust is based on the aggregate account balances of the participants in the respective participating plan. The Master Trust specifically identifies contributions, benefit payments, and plan-specific expenses attributable to each participating plan. Investment gains (losses) are allocated to each participating plan in the Master Trust on a daily basis based on each plan’s divided interest in the Master Trust. At December 31, 2025 and 2024, the Plan’s interest in the net assets of the Master Trust was $1,678,681,108 and $1,533,228,179, respectively.

The following table presents the investments and other assets and liabilities of the Master Trust and the Plan’s divided interest in the Master Trust as of December 31, 2025:

 

 

Master Trust
Balances

 

 

Plan’s Divided
Interest in
Master Trust
Balances

 

Master Trust investments, at fair value:

 

 

 

 

 

 

Self-directed brokerage accounts

 

$

68,568,900

 

 

$

36,593,685

 

Company common stock

 

 

224,735,489

 

 

 

171,527,658

 

Collective trust funds

 

 

1,796,495,832

 

 

 

1,044,145,179

 

Target date collective funds

 

 

858,158,743

 

 

 

332,783,445

 

Short-term investment funds

 

 

7,947,737

 

 

 

4,347,666

 

Total Master Trust investments, at fair value

 

 

2,955,906,701

 

 

 

1,589,397,633

 

Master Trust investments, at contract value (a):

 

 

 

 

 

 

Synthetic guaranteed investment contracts

 

 

181,495,804

 

 

 

89,283,475

 

Total Master Trust investments

 

$

3,137,402,505

 

 

$

1,678,681,108

 

 

The following table presents the investments and other assets and liabilities of the Master Trust and the Plan’s divided interest in the Master Trust as of December 31, 2024:

 

 

Master Trust
Balances

 

 

Plan’s Divided
Interest in
Master Trust
Balances

 

Master Trust investments, at fair value:

 

 

 

 

 

 

Self-directed brokerage accounts

 

$

63,933,022

 

 

$

36,346,094

 

Company common stock

 

 

249,819,280

 

 

 

190,097,587

 

Collective trust funds

 

 

1,505,906,782

 

 

 

897,771,423

 

Target date collective funds

 

 

763,362,777

 

 

 

302,042,924

 

Short-term investment funds

 

 

10,243,503

 

 

 

5,793,567

 

Total Master Trust investments, at fair value

 

 

2,593,265,364

 

 

 

1,432,051,595

 

Master Trust investments, at contract value (a):

 

 

 

 

 

 

Synthetic guaranteed investment contracts

 

 

202,398,484

 

 

 

101,176,584

 

Total Master Trust investments

 

$

2,795,663,848

 

 

$

1,533,228,179

 

 

(a)
The Master Trust holds a portfolio of synthetic guaranteed investment contracts within the PCA Stable Value Fund, which are measured at contract value and are therefore not included in the calculation of total net assets at fair value.

Net investment income for the Master Trust was as follows:

 

 

Year Ended
December 31,
2025

 

Interest income

 

$

5,778,134

 

Dividends

 

 

5,771,277

 

Net realized and unrealized appreciation in fair value of investments

 

 

418,595,482

 

Net investment income

 

$

430,144,893

 

 

 

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 — Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities.

Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

•
Quoted prices for similar assets and liabilities in active markets
•
Quoted prices for identical or similar assets or liabilities in markets that are not active
•
Observable inputs other than quoted prices that are used in the valuation of the assets or liabilities (e.g., interest rate and yield curve quotes at commonly quoted intervals)
•
Inputs that are derived principally from or corroborated by observable market data by correlation or other means

Level 3 — Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Assets that are measured at fair value using the net asset value (“NAV”) per share as a practical expedient are not categorized within the fair value hierarchy.

The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level of input that is significant to the fair value measurement in its entirety.

The following is a description of the valuation techniques and inputs used for each major class of asset measured to estimate fair value by the Master Trust.

Self-directed brokerage account: Valued at the closing price reported on the active market on which the individual securities are traded.

Company common stock: Valued using the share value calculated from the observable market price of the PCA common stock.

Collective trust funds, target date collective funds, and short-term investment funds: Valued using the NAV per share practical expedient since these assets do not have readily determinable fair values and are subsequently excluded from the fair value hierarchy. In general, there are no restrictions on the redemption of these funds, which is permitted daily upon proper notice, and there are no unfunded commitments associated with these funds.

The following tables set forth by level, within the fair value hierarchy, the Master Trust’s assets carried at fair value:

 

 

December 31, 2025

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Net Asset
Value (NAV)

 

 

Total

 

Master Trust assets (b)(c):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-directed brokerage

 

$

68,568,900

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

68,568,900

 

Company common stock

 

 

224,735,489

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

224,735,489

 

Collective trust funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,796,495,832

 

 

 

1,796,495,832

 

Target date collective funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

858,158,743

 

 

 

858,158,743

 

Short-term investment funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,947,737

 

 

 

7,947,737

 

Total Master Trust assets

 

$

293,304,389

 

 

$

—

 

 

$

—

 

 

$

2,662,602,312

 

 

$

2,955,906,701

 

 

 

 

December 31, 2024

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Net Asset
Value (NAV)

 

 

Total

 

Master Trust assets (b)(c):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-directed brokerage

 

$

63,933,022

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

63,933,022

 

Company common stock

 

 

249,819,280

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

249,819,280

 

Collective trust funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,505,906,782

 

 

 

1,505,906,782

 

Target date collective funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

763,362,777

 

 

 

763,362,777

 

Short-term investment funds

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10,243,503

 

 

 

10,243,503

 

Total Master Trust assets

 

$

313,752,302

 

 

$

—

 

 

$

—

 

 

$

2,279,513,062

 

 

$

2,593,265,364

 

 

(b)
The Plan determined that certain assets held in the Master Trust that do not have readily determinable fair values are measured at fair value using the NAV per share practical expedient and are not classified within the fair value hierarchy.
(c)
The Master Trust holds a portfolio of synthetic guaranteed investment contracts within the PCA Stable Value Fund, which are measured at contract value and are therefore not included in the fair value hierarchy.

Synthetic Guaranteed Investment Contracts

During the years ended December 31, 2025 and 2024, the Plan, through the PCA Stable Value Fund within the Master Trust, held investments in a portfolio of synthetic guaranteed investment contracts. The contracts in the PCA Stable Value Fund are fully benefit-responsive and therefore they are reported at contract value. Contract value is the relevant measure for fully benefit-responsive investment contracts because this is the amount that participants would receive if they were to initiate permitted transactions under the terms of the Master Trust and Plan. The contract value is calculated from the contributions made under the contracts plus interest credited less participant withdrawals and fees.

The PCA Stable Value Fund primarily invests in synthetic security-backed investment contracts and cash funds. Synthetic security-backed investment contracts are issued by insurance companies and other financial institutions (the “wrap contracts”) that are backed by a portfolio of bonds, fixed income common/collective trust funds, or other fixed income securities (the “underlying assets”) that are owned by the Master Trust and Plan.

The wrap contract issuers provide a rate of return that has a zero percent floor guarantee and provide full benefit responsiveness, provided that all terms of the wrap contracts have been met. Under the contracts, realized and unrealized gains and losses on the underlying assets are not immediately recognized in the net assets of the Master Trust and Plan, but are amortized over the maturity or duration of the underlying assets, through adjustments to the future interest crediting rate of the wrap contracts.

As of December 31, 2025 and 2024, there were no reserves against the wrap contract’s carrying values due to credit risks of the issuers. Certain events limit the ability of the Master Trust and Plan to transact at contract value with the wrap contract issuers. Such events may include, but are not limited to, Plan sponsor events that cause significant withdrawals from the PCA Stable Value Fund. However, the Master Trust and Plan’s management is not aware of the occurrence, or likely occurrence of any such events, which would limit the Master Trust and Plan’s ability to transact at contract value with the wrap contract issuers. The wrap contracts cannot be terminated by the issuer at a value other than contract value except under a limited number of very specific circumstances such as termination of the Master Trust or Plan or loss of qualified status of the Master Trust or Plan, material misrepresentations by the Master Trust or Plan sponsor or investment manager, the failure of the Plan’s trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA, failure by these same parties to meet material obligations under the contracts, or other similar types of events. However, the Master Trust and Plan’s management is unaware of any such events occurring that would allow the wrap contract issuers to terminate the contracts held by the Master Trust and Plan.