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Notice regarding incorrect valuation date


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Hello everyone!

I've posted this same message in the Mergers section, but maybe it's appropriate here as well. We have a client that merged with another entity. It used the wrong valuation date when valuing that entity's plan assets, and the plan itself took losses. Certain excess distributions were made to some employees but not others as a result. The DOL told us that for purposes of calculating the reduction in plan assets attributable to the excess distribution and earnings reduction, the DOL interest rate had to be used.

The plan intends to distribute to each participant their share of the earnings in the form of a supplemental distribution, IN THE SAME MANNER AS THEIR INITIAL DISTRIBUTION. So, if they took a lump sum before, the supplemental would also be lump sum, a rollover would also be a rollover, etc.

I'm just looking to see if this is ok. Does anything in the Regulations prohibit it? Thanks so much for the help!

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