Class Action Settlement

[Guest NPS Darren]

A client just received a Class Action Law suit settlement on an investment they had in there 401(k) Plan back in the year 2000.

My problem is how to allocate the proceeds, if we allocate to all those who had a balance in that particular investment it would be alot of time to research and determine the actual appropriate allocation. Also many of those whom had a balance in the year 2000 have obviously since been paid out.

One option I had thought of is to put it in the plan cash account and reallocate as forfeiture for the PYE 12/31/2008. Would this be an option?

[WDIK]

Can you give an approximate value of the settlement and approximate value of total investments?

[Peter Gulia]

Darren, page 8 of Field Assistance Bulletin 2006-1 [http://www.dol.gov/ebsa/pdf/fab2006-1.pdf] includes a suggestion that might be useful in the circumstances you described. Reading that background might help the plan administrator prepare to ask for its lawyer's and other experts' advice.

(Please understand that I express no view about whether the Bulletin is a correct explanation or application of relevant law.)

[PLAN MAN]

Each mutual fund company was required to file a distribution plan with the SEC. You should first review that to see if it includes a specific allocation methodology for plan participants. If not included then according to the guidance from the DOL, the plan fiduciaries are responsible for deciding on a reasonable and fair distribution method.