Which Valuation Date

[Guest ralar]

A participant terminated employment in 1998. The Participant signed and dated his distribution election forms July 1998. The election forms were mailed back to the plan administrator, and postmarked three months after the date on the election forms. Participant wants his benefit determined using the July 31 1997 valuation, but the Plan Administrator feels that the July 31 1998 valuation should be used, and is taking the position that the Participant back-dated the election forms (which were signed subsequent to the July 31 1998 vaustion date) in order to take advantage of the higher 1997 valustion.

Should the Aug 1997 or Aug 1998 valuation be used?

[Guest Larry Goldberg]

The short answer is the July 31, 1998, valuation should be used. In general, the fair market value of employer securities must be determined based on the most recent valuation date under the terms of the ESOP. If you have the post-marked envelope, I suppose that is evidence that either the participant back-dated the forms or the post office was at fault. However, if a participant can establish that the plan administrator received the forms and sat on them for three months, the participant may have a good claim that he is entitled to to the 1997 valuation.

Finally, the consent form you have may be invalid because it was executed more than 90 days before the distribution. (See Section 411(a)(11)).

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