Bank of America Fair Fund Distribution

[BG5150]

I have several clients getting proceeds from the Bank of America Fair Fund. It looks like it has to do with MFS funds.

What should we do with these proceeds?

I would think that pro-rating the funds across people who held positions in the funds, but the cover letter mentions that it applies to account held from 2000 through mid-2003. It would not be feasible to see who held accounts during that period.

However, I don't think it would be fair to spread it out across people who currently have a position in those funds.

I thought of just putting it in the forfeiture account, but I recall some time ago that this wasn't a well-regarded disposition.

Any thoughts?

[QDROphile]

You might get some ideas from Field Assitance Bulletin 2006-1.

[Guest TomB]

ASPPA also put out asap No. 09-34 about this subject.

[BG5150]

Thanks. I read those and the actual settlement document ( the url was in the cover letter), and these 5 were listed as possible, acceptable remedies:

(1) Allocate the distribution amount to current and former plan participants in the retirement plan in accordance with such participants’ account balances during the period to which the distribution in question relates, using balance information on a daily, monthly, quarterly or yearly basis;

(2) Allocate the distribution amount among the accounts of all persons (whether or not they are currently employees) who currently have a portion of their account in the retirement plan invested in the mutual fund to which the distribution relates (or, if the mutual fund no longer an option in the retirement plan, the current fund with the most similar investment objective), either pro rata based on account balances or per capita. The Fund Administrator will provide information what amount of any distribution relates to a particular fund;

(3) Allocate the distribution amount pro rata (based on total account balance) among the accounts of all persons who are currently participants in the retirement plan (whether or not they are current employees);

(4) Allocate the distribution amount per capita (based on total account balance) among the accounts of all persons who are currently participants in the retirement plan (whether or not they are current employees);

(5) To the extent that none of the four preceding alternatives is administratively feasible because the costs of effecting the allocation exceed the amount of the distribution, use the distribution amount to pay reasonable expenses of administering the retirement plan, to the extent permitted by the plan.

Here is a link to the document: http://www.sec.gov/litigation/admin/2007/34-57048-dp.pdf

[movedon]

(3) Allocate the distribution amount pro rata (based on total account balance) among the accounts of all persons who are currently participants in the retirement plan (whether or not they are current employees);

Always my personal favorite.