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< $5,000 involuntary cashouts with decline in market.


Guest Diane DuFresne

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Guest Diane DuFresne

When can the value of terminated participant account balances be considered for the $5,000 automatic payout rules?

With the severe decline in the market, I am sure that some terminated participants balances have now fallen below $5,000. Can the determination of balances occur quarterly? daily?

Any thoughts would be appreciated.

Diane

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Guest James Osterhaus

I would think that the determination date would be what ever the valuation schedule is. For example, for an unallocated account where the TPA produces a valuation every quarter, the determination date would be quarterly. For an allocated account, where dailey valuations are done, the determination date would be dailey.

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If you have a daily valued plan and have adopted the most favorable provisions under GUST, then you can sweep every day to see whose accounts are under $5,000 and can be forced out. Of course, if they don't respond and their account bounces back over $5,000 then you can't force them out.

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