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Missing Asset Value (Not Available)


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My client owns “Altaba, Inc. Escrow” stock as an asset in a pooled fund in its profit sharing plan. It allocates total plan investment earnings annually among plan participants. The stock is no longer actively traded on the stock exchanges and Fidelity lists its asset value at 12/31/19 as “not available”. How can I determine the value of this stock at 12/31/19 to use in calculating its investment earnings for 2019 to use in my total plan investment earnings to be allocated among plan participants for 2019?

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"If the asset does not have a readily determinable market value, then it must be valued by an independent third party appraiser."

The stock is probably worth less than $2,000 at 12/31/19. The investment earnings on it for 2019 may only be a couple of hundred dollars.  Must the  employer hire an independent third party appraiser when the amounts are so small. My guess is that TPAs are not hiring an appraiser in these situations. Does anyone have a better solution that won't cause problems with the IRS? Thanks. 

 
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Let's be clear here you don't have to hire an appraiser for this.   The trustee and Plan Administrator have a fiduciary duty to come up with a good FMV.   If you don't use an appraiser you have to mark that question on the 5500 saying it isn't traded and hasn't been appraised.   They better do a good job of documenting their method of coming up with that value in case it gets questioned.   Although it sounds like this might not be a material asset at this point.  

If this plan isn't audited you have to look into if this still allows you to not audit the plan.  I do very few plans with <100 participants in it so I forget how that works but I am thinking that this could be an issue here but willing to be told I am wrong.  But the audit safe harbor rules are based on all the assets and data is coming from sources that can be trusted and know you have an assets that isn't being held at one of those type of places.   Like I said it is outside my wheelhouse but check the audit requirements.  

If the plan is audited I would make sure what method you use they can live with it.

But the legal requirement is to show the FMV.  If the trustee thinks they can do that and be prudent about it so be it.   They should know the risks of being wrong but they can come up with a FMV.  

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I pretty much agree with ESOP guy.  Assuming it's a small plan, you don't get to say all assets are eligible unless they are held by a bank, B-D, etc. and have a readily determinable FMV.  So, this is certainly held in a brokerage account, but trading is suspended (Altaba Inc is the former Yahoo, right?) so no FMV to read off of a statement.  Sigh...if I can get someone, anyone, e.g. the broker, to give some kind of value that is not totally unreasonable, I'm going to let the client tell me that that is indeed FMV (if the facts are as understood, basically a small part of the assets...it helps if I know that no one is getting a distribution based on the value since that will self-adjust when and if it is liquidated or otherwise closed out)...and take my chances, or more accurately, let them take their chances after discussing it.  Sorry to all the sticklers out there.

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