Interim Valuations and Discrimination

[KJohnson]

Plan provides for annual valuations and interim valuations at discretion of trustee. This is o.k. under Rev. Rul. 80-155 as long as the interim valuations do not discriminate pursuant to 401(a)(4).

However, what are you looking at under 401(a)(4)--benefits rights and features testing? Also, when the market goes down, who are you testing? Are those that are "staying in" the Plan and not receiving a distribuiton actually the ones who are enjoying the benefits right and featrue?

[Tom Poje]

I would think the issue would be HCEs. If the only time I perform an interim val would be for a payout of HCEs, I would have a problem with that. I guess that would be a BRF, that is interim vals favoring HCEs. if the market goes down, and the payout is only to NHCEs, then I think once again you have problems because you probably never treated an HCE that way before.

That doesn't mean you can't do it, especially the way the market has been going recently, but what happens next year if the market goes up. do you also perform an interim val - and each and every time someone wants a distribution? personally I am uncomfortable with the idea, but the regs do allow it.