Balance Forward 401(k)

[Guest Achilles]

We have a bfwd plan, with annual valuations. Several participants had lump sum distributions processed in Sept. 2007, based on 12/31/2006 account balance.

They now believe they are due additional monies - any gains/losses for the first 9 months of 2007.

Is this an IRS or DOL law for a bfwd plan that they would not be entitled to these earnings, or is this something that would be specified in the adoption agreement? It's a standardized prototype.

Thanks in advance.

[Jim Norman]

We have a bfwd plan, with annual valuations. Several participants had lump sum distributions processed in Sept. 2007, based on 12/31/2006 account balance.

They now believe they are due additional monies - any gains/losses for the first 9 months of 2007.

Read the plan document, if it is properly done consistent with annual valuations, it should provide that earnings are posted only on the valuation date, the last day of the year.

[Guest Achilles]

Read the plan document, if it is properly done consistent with annual valuations, it should provide that earnings are posted only on the valuation date, the last day of the year.

Jim, if earnings are allocated on the last day of the plan year, are those with a zero balance skipped? Is it as cut & dry that only those with a balance on the valuation date will receive earnings?

Thanks.

[Kimberly S]

If earnings are only allocated on the last day of the year, and there is no balance on that day, they get no earnings is the way I've always understood it.

[Bill Presson]

Jim, if earnings are allocated on the last day of the plan year, are those with a zero balance skipped? Is it as cut & dry that only those with a balance on the valuation date will receive earnings?

Thanks.

Here is some typical language:

ALLOCATION OF EARNINGS AND LOSSES: As of each Valuation Date, accounts which have not been

distributed since the prior Valuation Date will have the net income or loss of the Trust Fund earned since the prior

Valuation Date allocated thereto as hereinafter set forth in this Section. Net income or loss is the net of any interest,

dividends, unrealized appreciation and depreciation, capital gains and losses, and investment expenses of the Trust Fund

determined on each Valuation Date.

[Tom Poje]

I suppose if there had been a loss then these same people would be more than glad to return the 'loss' attributable to their share as well, wouldn't they?

[Kimberly S]

I suppose if there had been a loss then these same people would be more than glad to return the 'loss' attributable to their share as well, wouldn't they?

A very timely observation given the market activity thus far in 2008.