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Allocation or reversion of demutualization proceeds received from a gr

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  • 5 months later...
  • 2 weeks later...

I wonder if the prior posters would be willing to share any conclusions.

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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  • 4 weeks later...

E. Moreland--what facts did you consider--the reversion lanugage of the prior plan document?

Did you base the reversion amount on the amount actually received or on another value--such as the possible value of a future demutualization at the time of termination?

Also, if an Employer chose to "give this" money to the annuitants, what is the source of the following warning that was in some of the documents:


Some Prudential group contracts were issued to fund plans that were at one time subject to ERISA but are now terminated. These contracts include termination annuities. Because it is not clear under the relevant authorities how demutualization

compensation attributable to a terminated plan’s annuity contract should be treated, you may incur less risk of a challenge if you treat the compensation as a ‘‘ plan asset’’ and use it to provide enhanced benefits to the plan’s former participants whose benefits are provided under an annuity

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The reversion language in the prior plan document was one of the relevant facts.

I based the reversion amount on the value of the membership rights at the time they reverted to the employer.

I'm not sure I understand your last question, and I'm not sure I agree with the caution in that statement. It seems to me that you first need to determine who owns the demutualization proceeds. If they belong to the employer, deciding to give them to the employees instead avoids no problems and raises new ones.

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