Segregation date determination

[Guest richw68]

Hi,

I was hoping someone could help me out here. In my MSA it states the following:

The parties acknowledge that at the time of separation, the marital share of the account equaled $xx,xxxx.xx. The Wife shall be entitled to one-half (1/2) of the marital share plus any earnings or lossess on said share as of the date of separation on February 28, 2011. The Husband shall be the sole owner of any deposits to this account after February 28, 2011.

I have Fidelity for my 401k plan and they want a "Valuation Date" which I see (based on the above) as February 28, 2011. Then they want to know if the alternate payee is entitled to gains/losses. The way I read the above language it states that she is entitled to gains/losses as of February 28, 2011. The way Fideility states it is usually gains/losses are from the valuation date up until the date of segregation. My agreement does not state that. It states as of the date of separation. So basically the date of segregation for me (as I read it) is also of February 28, 2011.

In a nutshell even though she is entitled to gains/losses the valuation date and segregation dates are the same so she is not really entitled to anything since it is the same day. Am I reading that correctly?

Thanks,

Rich

[K2retire]

As of the valuation date of February 28, 2011 she was entitled to a specific dollar amount. Based on the question coming nearly 2 years later, I'm guessing the segregation has not yet happened. Fidelity apparently wants to adjust the dollar amount for earnings since then, and you do not. If the funds had been paid to her on February 28, 2011 she would have gotten the earnings. Why do you believe it should be any different now?

[Guest richw68]

As of the valuation date of February 28, 2011 she was entitled to a specific dollar amount. Based on the question coming nearly 2 years later, I'm guessing the segregation has not yet happened. Fidelity apparently wants to adjust the dollar amount for earnings since then, and you do not. If the funds had been paid to her on February 28, 2011 she would have gotten the earnings. Why do you believe it should be any different now?

My final divorce did not occur until July 2012 and now we are working to get the QDRO completed. That is why the "segregation date" has not occurred. I have used Fidelity's website to create the QDRO document and I am trying to decipher the language of the MSA. She is still entitled to the specific dollar amount as of February 28th, 2011. What confuses me is that it states she is entitled to gains/losses as of February 28, 2011 which is also the same as the valuation date. I would think it should say she was entitled to gains/losses as of the final decree date or the segregation date, but it does not. It clearly states the separation date. So yes, she is entitled to gains/losses up until (as of) February 28th, 2011, but what I am trying to make sure is if she is entitled to gains/losses from February 28, 2011 to now (which will eventually be the segregation date). It certainly does not read that way to me, but wanted to have some other folks take a look and let me know what they think.

Thanks!

[ESOP Guy]

richw68:

Think of it this way. Up to 2/28/2011 the account was yours but your then wife had rights in it. On 2/28/2011 in a perfect world if everyone had perfect knowledge the accounts would have been separated into two accounts and your ex-wife would get her share. Her share as of that day would have included contributions made on your behalf up to that day plus any gain/loss. Then after that point she would have gotten her earnings in her account and you would have gotten your earnings on your account. Every thing would have been separated and fair in everyone's mind. But we don't live in a perfect world. So while there was only one account in reality it had two parts. Part 1 is your part and Part 2 is her part. What Fidelity is doing is now trying to come up with what Part 2 equals. They are trying get both of you to a point that is neither better or worse off then if the accounts could have been split on 2/28/2011.

Hope that helps.

(Edit note: I appear to have written this while richw68 was adding his reply.)

[Bird]

I agree, the Alternate Payee would typically get gains or losses from the valuation date, and I think this order is saying that, although not all that clearly.

The Wife shall be entitled to one-half (1/2) of the marital share plus any earnings or losses on said share as of the date of separation on February 28, 2011.

I think means to say:

The Wife shall be entitled to one-half (1/2) of the marital share as of the date of separation on February 28, 2011 plus any earnings or losses on said share.

If I were reading it, I'd probably shake my head a bit at its sloppiness and read it as I say above.

It doesn't have to include gains or losses from the valuation date, but that's not what I'm reading here.