Distributions Based on Interim Valuation

[Susan S.]

Pooled profit sharing account valued annually on 12/31. The plan's written policy calls for an interim valuation if the balance of the participant's account to be distributed equals or exceeds 5% of the total of the plan's pooled assets. Can the interim valuation be used for the exclusive benefit of participant X, the individual for whom the valuation was performed? Let's say an interim valuation will be done on 7/31/14. Participant Z terminated on 5/1/13 and his account was valued on 12/31/13. He has a small balance and has not been paid out. If a distribution is made to participant Z between 8/1/14 and 12/30/14, can we still pay out based on the 12/31/13 valuation or are we obligated to pay based on the interim valuation? It seems like you can make a case for using the 12/31/13 amount since the interim valuation was only intended for a specific individual.

[Lou S.]

You might want to test that interim val for BRF as I'm guessing most of the folks with >5% of the assets are HCEs.

[ESOP Guy]

I don't even see the benefit of not using the interim valuation other then someone knows the plan has had income and doesn't want to share. The work is done. Once you know the knew value for one person you know it for everyone.

[Bird]

Plan language probably says something like "distribution is based on last valuation date" so if you had an interim val on 7/31 that is the last valuation date - for everyone.

[Susan S.]

Thanks to all for the excellent guidance!!