Distribution in a pooled plan

[pixmax]

Scenario - participant termed 2 years ago. Based on the Plan Document distributions occur when administratively feasible and the plan is valued once a year at 12/31. If a participant wanted to take distribution in November following the plan value he would receive the 12/31 prior year value, correct? Gain/loss would be allocated amongst those with account balances as of 12/31. What happens if the termed participant takes out his balance and the remaining left does not cover the remaining balances? It makes sense to value quarterly or when a person wants to take distribution but of course the plan sponsor does not want to pay for the cost. Any suggestions or comments would be greatly appreciated.

[EBDI]

That is correct, he would receive the value from the prior year, which isn't fair to the others in a down market and not fair to him in an upswing. Have you looked into amending the plan document to restrict distributions to once a year after the plan year ends? Would the plan sponsor agree to a special valuation whenever someone needs a distribution? Some plan documents allow for interim valuations.

[Bird]

Correct. Any distribution during a year is based on the prior 12/31 val. If the account is small relative to the total, we don't worry too much about the fairness of it. If it is a large balance, then we might do an interim val; certainly if there were significant losses that would impact others disproportionately. It's also a good idea, prior to the interim val date (or 12/31 if you know of a pending distribution), to liquidate an amount approximately equal to the pending distribution so you're not constantly chasing your tail in a fluctuating market.