Demutualization Proceeds

[Atila]

If a 401(k) plan document requires that funds received as a result of a demutualization are distributed to the participants as of the record date, but proceeds are paid out much later, how hard must the fiduciary look to determine who was a participant as of the record date?

[QDROphile]

No comment on the plan terms, which may be the cause of the problem. The Department of Labor issued a Field Assistance Bulletin on demutualization proceeds that might be of some help.

[ESOP Guy]

While this is NOT a correction-- the correction rules allows one to ignore corrections of distributions that are below a dollar amount. Doing this from memory but $75 is what I am thinking the limit is.

I would see if the plan's attorney is comfortable using that limit here even if not a correction.

Any large amount and I think you have to find the people and pay them.

[BG5150]

That's pretty restrictive document language.

[david rigby]

Advisory Opinions here: http://www.dol.gov/ebsa/regs/AOs/main.html#2001

You want 2001-02A.

[BG5150]

Does the DoL opinion mean anything if the plan doc tells you how to dispose of the proceeds? As long as it's one of the methods listed, I think the OP has the course of action.

OP: How long ago was the record date? Do you need participants in the plan? Or participants invested int he insurance product?