recovery of "re-pricing" investment losses - how to allocate?

[t.haley]

Employer sponsored a 401k plan. In the early 2000s one of the investment funds was "re-priced" causing a loss in the fund. Thereafter, the plan switched investment providers. In 2005 the plan sponsor filed bankruptcy. All participants have received distributions and there are no assets remaining in the plan. In 2008 the plan sponsor receives a check from the former investment provider representing the recovery of a portion of the fund's losses (in excess of $20,000). There are no current participants in the plan, the plan sponsor is not operating and has no employees. The bankruptcy is still open and the plan has not been terminated (that we know of). We have also been told that the records need to allocate the recovery funds (if that is what is required) no longer exist. The bankruptcy trustee is seeking guidance on what to do with the recovery funds. Any suggestions?

[chc93]

We had this situation a few years ago... but I think our amount involved was more like $1,500, and were litigation settlements. Company in bankruptcy, plan terminated on bankruptcy date and all distributions subsequently completed, no assets in plan, bankruptcy still open, bankruptcy trustee in charge. Based on DOL Field Assistance Bulletin 2006-1, all parties involved agreed to return the funds to the sender, and bankruptcy trustee authorized. (see pages 8-9)

fab2006-1.pdf (I hope this attachment works)

hope this helps...