DOL Lost Interest "Aha Moment"

[austin3515]

An internal email I just sent that I decided to share with my BL Buddies!

When you are processing lost interest for a lot of people, the hard way is to calculate the total interest and then use a somewhat complicated formula to prorate based on total interest and total 401k.

Here is an easier way. Enter the loss amount as $100,000. Whatever the interest is can easily be converted to a percent. So if the interest comes out to be 6,472.32, the interest rate (or "factor" to be more precise) is 6.47232% which ought to be precise enough to get us within a penny or two of what interest ought to be. So just multiply each person’s 401k by 6.47232%. No calculator required for that conversion, just pretend the comma is the decimal point.

If you are using this technique, I would still calculate what the total interest is supposed to be (i.e., enter the actual loss amount with the same dates) so you can prove you did it correctly.

I guess it will only work with one loss date at a time.

I hope you like it...

[david rigby]

I thought the "lost interest" portion of the title meant something else.